Forensic accounting expert witnesses are subject to various professional standards that govern their conduct, qualifications, and opinions. The applicability of these standards may vary depending on the jurisdiction, the nature of the dispute, and the expectations of the parties involved. As expert witnesses navigate the dynamic and complex realm of forensic accounting, it’s essential to consider standards applicable during cross-examination. Forensic accountants must be prepared to uphold professional standards in the face of questioning, ensuring that their qualifications, methods, and opinions withstand scrutiny.
Some common sources of professional standards for forensic accounting expert witnesses are:
- The American Institute of CPAs (AICPA) Standards for Consulting Services, Standards for Forensic Services, and Code of Professional Conduct
- The Association of Certified Fraud Examiners (ACFE) Code of Professional Ethics and Standards of Professional Practice
- The National Association of Certified Valuators and Analysts (NACVA) Professional Standards and Code of Ethics
- The ASA Principles of Appraisal Practice and Code of Ethics, which defines the scope of practice, responsibilities, and obligations of American Society of Appraisers (ASA) members
These standards provide guidance on various aspects of expert witness services, such as:
- The scope, objectives, and limitations of the engagement
- The qualifications, competence, and independence of the expert witness
- The methods, procedures, and sources of data used in the analysis
- The documentation, reporting, and disclosure of the findings and opinions
- The communication, cooperation, and conflict resolution with other parties and experts
- The fees, expenses, and billing arrangements for the services
These sources of professional standards may differ with each other in some respects, so forensic accounting expert witnesses should be aware of and comply with the applicable standards for each case or situation.
It’s especially important for CPAs who perform expert witness services to be well versed in the Statements on Standards for Consulting Services and Statements on Standards for Forensic Services. The Statements on Consulting Services govern the conduct of CPAs who provide advice or assistance to clients in various areas, such as management, finance, strategy, operations, technology, or human resources. The Statements on Standards for Forensic Services are a set of guidelines that govern the conduct of CPAs who provide either litigation services or investigative services.
The Statements on Standards for Forensic Services define litigation services as “an actual or potential legal or regulatory proceeding before a trier of fact or a regulatory body as an expert witness, consultant, neutral, mediator, or arbitrator in connection with the resolution of disputes between parties.” The Statements on Standards for Forensic Services specifically mention that litigation is “not limited to formal litigation but is inclusive of disputes and all forms of alternative dispute resolution.” Therefore, it’s especially important to consult the Statements on Standards for Forensic Services any time an engagement could potentially involve a legal or regulatory proceeding.
These guidelines, established by the AICPA, encompass the following key aspects and standards in regard to CPAs:
- Professional competence: Ensure the requisite skills, knowledge, and experience are possessed by those to perform the engagement.
- Due professional care: Exercise care and diligence in performing services and comply with applicable laws and regulations.
- Planning and supervision: Plan and supervise engagements to ensure they are performed effectively and efficiently.
- Sufficient relevant data: Obtain data that is relevant, reliable, and sufficient to support conclusions and recommendations.
- Understanding with the client: Establish a clear understanding with clients about the objectives, scope, nature, and limitations of their services.
- Communications: Communicate with clients throughout the engagement and keep them informed of the progress, results, and any significant issues or difficulties.
- Reporting: Report findings and recommendations to clients in a clear, concise, and timely manner.
Ultimately, compliance with these professional standards is not merely a regulatory obligation; it is the linchpin for the integrity and reliability of expert witness services provided by forensic accountants. By upholding these standards, experts contribute to the credibility of their findings, fostering trust in the legal and investigative processes they support. In the dynamic realm of forensic accounting, adherence to professional standards, especially during cross-examination, remains the cornerstone for delivering objective, competent, and principled expert witness services.
If you have any questions or need assistance, please reach out to a professional at FORVIS.