Forensic accounting is the practice of binding together accounting and auditing with investigative skills to assist in legal matters. It is primarily used in areas such as litigation support, investigation, and dispute resolution.

 

Methodology

Roberts was not only the owner but the sole employee of his company. Under this business structure his remuneration was issued in various forms, including salary, bonuses and dividends, and other benefits such as a company vehicle and certain entertainment expenses. While on the surface it appeared Roberts was not earning a large salary because of the benefits received and the different forms in which he took his income, in reality he was bringing considerably more into the family. It was argued that for the sake of assessing his family's loss, the matter should be handled in a way that reflected that reality. In other words, lift the corporate veil and treat Roberts as a sole proprietor to whom all profits of the company flowed regardless of the means by which they were paid out.

That approach allowed the Forensic Accountant, and subsequently the court, to look at what realistic level of support Roberts had provided for his family. Therefore it was possible to take into consideration such items as the family car, vacations and other benefits that otherwise would not be included. It was concluded that a maintainable annual level of support would be in the range £27,000 to £39,000. Considering all the factors in the case, the court was presented with a conservative estimate of annual deductions for such items as income tax, an actuary projected the total claim, based on Roberts' estimated lifespan, to be worth £640,000.

Results

The court accepted the approach of dealing with the corporate structure of Robert's finances. The Judge appreciated that the report had "bent over backwards" to be fair, and went on to increase the annual stipend to £33,000. That brought the total award to £670,000.