What are Forensic Accountants?
Forensic Accountants are accountants that use special skills to investigate and analyze financial transactions. In divorce, they are used for four (4) primary purposes.
Determine Cash Flow for Support
One factor of support is income. If you are an employee, “income” is easier. But as a self-employed individual, it’s a bit murky.
What is “income”? For child support purposes, it is defined in California Family Code 4058. “Income” is “commissions, salaries, royalties, wages, bonuses, rents, dividends, pensions, interest, trust income, annuities, workers’ compensation benefits, unemployment insurance benefits, disability insurance benefits, social security benefits, and spousal support actually received from a person not a party to the proceeding to establish a child support order under this article.”
Also, “Income from the proprietorship of a business, such as gross receipts from the business reduced by expenditures required for the operation of the business.”
Also, “income” can be “employee benefits or self-employment benefits, taking into consideration the benefit to the employee, any corresponding reduction in living expenses and other relevant facts.”
Forensics are hired to value businesses? How much is a flower shop worth? How about a medical practice? A law practice?
Tracing Separate and Community Property
If you 1) have a prenuptial agreement; 2) never co-mingled; and 3) kept great records throughout your marriage, you may not have tracing issues.
But when you have comingled your separate and community property, you may need to hire a forensic to trace which is which.
Uncover Hidden Assets
They will do their best to look at all revenue streams, tax records, bank accounts and analyze each and every transaction to find where the money went.