When couples decide to part ways, the division of assets can often become a complex and contentious process. This is especially true when the couple has significant wealth.
In such cases, forensic accounting plays an important role in ensuring fairness and transparency in the distribution of assets.
Identifying and valuing assets
Of married women, 989,518 divorced in 2022, and a full valuation and accounting of the marital assets is part of the process. Forensic accountants uncover financial information. They examine financial records, bank statements, tax returns and business records to identify the couple’s assets. The assets may include real estate properties, investment portfolios, businesses and intellectual property.
Tracing financial transactions
In high-asset divorces, one party may attempt to conceal assets or transfer funds to offshore accounts to avoid division. Forensic accountants trace financial transactions and uncover any attempts at hiding assets. They examine financial documents to identify irregularities. They ensure that they account for every asset.
Assessing income and cash flow
Determining each party’s income and cash flow helps the court calculate alimony and child support payments. Forensic accountants analyze income sources to identify each spouse’s financial resources. These sources include salaries, bonuses, investments and business revenues.
Uncovering financial misconduct
In some cases, one spouse may engage in financial misconduct that can impact the divorce settlement. This misconduct may include embezzlement, fraud or hidden debts. Forensic accountants uncover and provide evidence of misconduct. By presenting this evidence in court, they help ensure that the division of assets is fair. They also help the court address any wrongdoing.
Forensic accountants provide expert testimony based on their findings. Their expertise in financial matters and their ability to present complex financial information clearly and concisely make them valuable witnesses in court.