As forensic accounting is applied in the examination of insurance claims, we find that all too often the forensic examiner is handed a stack of documents, reviews same and prepares a report that essentially confirms that solely upon a review of those records, the documents appear to substantiate the claim.
Personal Income Loss
In Michigan, PIP, third party BI/property damage and uninsured/underinsured motorist claims regularly involve material exposure to claims of self employed individuals. Layers of interwoven corporate entities, nebulous sources of business and limited records all require skills of a professional investigator not just an accountant to manage.
Commercial Income Loss Calculation
As you can imagine, calculations of income loss are the backbone discipline for forensic accountants. Aside from the traditional accounting skills, mastery of intricate commercial loss calculations involves a deeper understanding of the revenues and expenses for the subject business’ industry sector. Unique skills like the ability to determine trends in revenue as they relate to earnings for that industry, expenses as they relate to the period of restoration, coinsurance issues and the like are required for competency, yet rare within the industry.
In cases of partial or permanent disability as well as wrongful death, carriers often require an expert who can accurately determine the net present value of future earnings on that loss. These calculations involve a large number of variables, including taxes, earning cycles, personal consumption and many others that need careful consideration and support to craft a complete and clearly defensible value.
Property Damage Self Repair
When a claimant repairs property damage internally, it is often done on a full absorption costing basis. Although an expert appraiser can be helpful in determining the accuracy of that costing, our forensic accountants have experience beyond that of an appraiser. We can help in evaluating those costs more closely to determine which were incurred as a result of the loss and which were not.
Commercial Value Downtime
When commercial transportation claims presented by trucking firms, transportation companies and passenger transport businesses allege that a downtime loss occurred, RCT can be used to evaluate the revenues and comparative expenses to ensure that other units were not used or available to offset the disruption.