In Ontario, forensic accountants frequently assist Lawyers and insurance companies in quantifying economic losses resulting from personal injury, wrongful death, or employment loss. These individuals, as economic assets, generate a stream of current and future earnings, and factors such as age, education, geographic location, gender, occupation, industry, union membership, and health significantly impact this future income.
Main Goal of Forensic Accountants
The primary role of a forensic accountant in cases of personal injury, wrongful death, and similar damage claims is to calculate damages as a lump sum present value that reflects both past economic losses and reasonable future losses. This calculation is based on data available up to the trial date, which presents several challenges. Predicting future damages is inherently uncertain, so the expert must provide estimates that are economically reasonable without being able to guarantee their accuracy. The expert’s credibility and ability to avoid impeachment as a witness depend on presenting a well-supported, objective analysis.
Information and Data Required
To make a robust damages argument, forensic accountants need comprehensive data, including:
- Personal Details: Age, education, training, geographic location, gender, and health.
- Employment Details: Occupation, industry, union membership, historical earnings, and future earnings potential.
- Financial Records: Past income, fringe benefits, and employment-related costs.
- Economic Trends: Inflation rates, industry-specific economic conditions, and potential changes in earning capacity.
Addressing Challenges
Forensic accountants address various issues to provide an accurate lump sum calculation:
- Inflation: They adjust future earnings for inflation to determine the present value of future losses.
- Union Status: They consider the impact of union agreements on future earnings and benefits.
- Partial Year Payments:They account for any discrepancies in annual earnings and adjust calculations accordingly.
- Fringe Benefits: They evaluate the value of benefits such as health insurance, pensions, and other perks that contribute to the overall compensation.
Computing the Lump Sum
The expert calculates the appropriate lump sum by discounting future economic losses to present value, incorporating factors such as inflation, wage growth, and changes in employment circumstances. This involves complex actuarial and financial modeling to ensure that the final figure reflects both past and anticipated future losses accurately.
Role of the Forensic Accountant
The forensic accountant’s role is to provide objective and unbiased estimates of economic damages. Their analysis should remain consistent regardless of whether they are working for the plaintiff or the defense.Qualifications and Expertise
Lawyers select forensic accountants based on their expertise, which typically includes:
- Advanced degrees in relevant fields.
- Membership in professional associations.
- Publications in peer-reviewed journals.
- Experience in expert witness testimony.
While credentials and analytical skills are important, the ability to present effectively in court is crucial. The expert’s demeanor, appearance, and non-verbal communication can significantly influence their effectiveness as a witness. Impact of a Forensic Accountant
In cases of personal injury, wrongful death, or lost employment, the contribution of an experienced forensic accountant can be substantial. Their skills in accounting, tax, business consulting, financial analysis, and legal knowledge, combined with intellectual curiosity, professional skepticism, attention to detail, persistence, creativity, and effective communication, can greatly enhance the evaluation and presentation of economic damages.
If you or a loved one has been seriously injured due to the negligence of another party and you have questions about pursuing legal action, please contact personal injury lawyer Mohammad Asadullah at 905-268-0046 or mohammad@asadlaw.ca