Forensic Accountants Make It Add Up

FRAUD. A five-letter word with consequential effects on individuals, organizations, and the economy as a whole. Fraud can be defined as an intentional act of deception in order to acquire something of value, whether it be a personal or financial...

Picture this, you, CFO, are sitting at your desk when an anonymous letter arrives alleging that employee X has been committing fraud against your company.  Your first thoughts might be disbelief, anger and betrayal.  You may question your relationship with...

While I consider myself a pacifist, as a forensic accountant, I have been occasionally referred to as a fraud “fighter”. So, in the spirit of International Fraud Awareness Week (November 13 to 19, 2022), I would like to share some...

Bitcoin. Ethereum. Litecoin. Dogecoin. NFTs. While they may seem like buzzwords or fads, cryptocurrencies or digital assets are experiencing a similar adoption pattern to the internet in the 1990s. In 1995, 14% of U.S. adults had internet access; by 2000,...

COVID-19 has sent shockwaves throughout much of the insurance world. Insurance company stocks have been some of the worst performing since the virus went, well… viral, in anticipation of declines in profits due in part to COVID-related claims. Much of...

As the markets react to each update on COVID-19, a quote from Warren Buffet has seen increased circulation: “Only when the tide goes out do you see who’s been swimming naked”. The current environment has seen increasing news of corporate...

If you have not worked with forensic accountants before, an understanding of what they do in litigation support and how they differ from other accountants may be surprising to you. Modern television dramas’ common use of the word “forensic” may...

A growing area of concern for corporates is the proportion of fraud committed by “frenemies”, an encompassing term for the third parties a company works with on a day-to-day basis. This includes suppliers, agents and consumers: entities with which a...

Last week, the Auditor General of Toronto issued a report estimating that in 2018 alone, the TTC lost $61 million due to fare evasion. As both a frequent rider of the TTC and a forensic accountant specializing in fraud investigations, I...

The Fraud Triangle: Rationalisation, Opportunity and Pressure Any elementary student of fraud will be aware of the “Fraud Triangle”, a theory developed by Edwin Sutherland and Donald Cressey. This theory posits three elements of fraud: Rationalisation (the ability of the...

Alternate dispute resolution (ADR) is any procedure that is used in matters that would otherwise be settled in a court of law. Examples of ADR include arbitration, mediation, appraisal, and mini-trial. ADR is a dispute resolution strategy with applications to...

A fraudster’s gain is someone else’s pain – or loss; but is the corporate fraudster’s gain always the same as the insured’s financial loss? Are the financial implications of the fraud always the same as the actual loss to an...

It’s happened.  You find your company is facing the business end of a class action lawsuit.  Perhaps this stemmed from your product not meeting customers’ expectations or maybe there are allegations that your product is not performing as advertised. Now...

The most common response I hear from business owners who are victims of employee fraud is “I never thought this would happen to me”. Employee theft, especially in the automotive industry, is common, because small businesses such as car dealerships...

With the busiest season of the year for retail sales upon us, you are no doubt wondering what to buy for that special someone. If you’re reading this blog – and I have every reason to believe you are –...

While we’re thinking about turkey and cranberry, an important business holiday will come and go – not with the same fanfare as Thanksgiving perhaps but with significant potential for preserving the business future for those who take note. During International...

The Federal Court of Appeal has issued a ruling that could have wide-ranging consequences for the calculation of patent infringement damages.  In Apotex Inc. v. Merck & Co., Inc., 2015 FCA 171, the FCA rejected the trial judge’s ruling (Merck...

The case of Varco Canada Limited v. Pason Systems Corp., 2013 FC 750 (CanLII) involved an award of over $52M based on an accounting of the defendant’s profits. Perhaps more importantly, the decision sheds light on a number of conceptual...

In Canada, as a general rule, damages awards are subject to the same tax treatment as the monetary amounts they are meant to replace. For example, awards for lost profits are taxed as business income [1]. Litigation can often take...

During the course of matrimonial disputes, there are often situations where solicitors find it helpful to engage specialist investigators and appraisers. In particular, forensic accountants can help to provide the court with a clearer view of the true financial position...

In the legal and accounting professions, potential conflicts of interest can arise before or during the course of an engagement.  Most firms have policies and procedures in place that govern how conflicts are identified and managed, to ensure that client...

Mining companies should take note of Canada’s stricter penalties and more aggressive enforcement of anti-corruption laws and make sure their anti-bribery compliance procedures are up to speed, lawyers, forensic accountants and mining executives warned at a recent conference in Toronto....

When a business falls victim to cheque fraud, it may look to its bank for recovery for allowing the fraudulent cheques to be cashed.  In some recent cases, banks have been found liable and have been required to make whole...

It is alleged that your client had financial motive to commit a very serious crime.  Forensic accountants are often utilized to analyze the defendant’s financial records, and provide an opinion on the existence of financial circumstances that assist in assessing...

The U.S. Chamber of Commerce estimates that occupational fraud costs U.S. businesses over $50 billion annually and that one-third of business failures are directly related to employee theft. The Chamber also estimates that 75% of all employees have stolen from...

Usually when you tell people that you’re a forensic accountant, you’re met with the same predictable and equally awful response: “So, you count dead peoples’ money?” Well, not exactly. It’s generally followed by something like, “You must be really good...

The Federal Court’s decision in Merck & Co. v. Apotex Inc. [2013] F.C.J. No. 840, has shed a novel light on to how damages for patent infringement are to be calculated. Previously, in its decision in Monsanto Canada Inc. v....

It is becoming increasingly important for attorneys to understand financial statements and their relevance to various types of business and legal situations. The non-accountant attorney will greatly benefit from a basic understanding of the key principles of accounting. Equally important...

Discovery is under-way. The records are starting to flow. As you leaf through a box of documents just delivered, you pull out a stack of financial statements and, like so many other attorneys, you cringe. As you scan through the...

Are you concerned about how your employees can get around your accounting policies or what unintended impact they might have? Here are two areas where accounting policies may pose a risk. Revenue Recognition Revenue recognition is always on the mind...

It is almost ten years since the Arthur Wishart (Franchise Disclosure) Act was introduced in Ontario. The Act seeks to protect often unsophisticated purchasers of franchise rights by requiring that certain disclosures be made to franchisees prior to entering into...

Section 6(6) of the Arthur Wishart Act gives franchisees the right to rescind their franchise agreements in the event that they do not receive a disclosure document. Ostensibly, the rescission remedy is designed to return the franchisee to the position...

Fidelity losses are difficult to investigate because frauds can be complex and hard to detect.  Here are 5 steps to keep in mind when assessing fidelity claims. Understand business and accounting system Identify who performs the accounting duties and the documents generated...

Corporate fraud, insider trading, 9/11, intellectual property infringement the list goes on as to instances where parties have committed acts resulting in financial losses. The legal challenge in proving financial wrongdoing is a minefield in itself, but what steps need...

Plaintiff and Defense attorneys are guilty! Guilty of waiting until the last minute to address areas of damages. MDD is very often retained in litigation engagements when the measurement of damages takes a back seat to liability and causation. Although...