Question

Up North Marina is and has been the only marina on Lake Woodward for the last 20 years. There have been numerous efforts to open other marinas during this time period. Each attempt, however, was unsuccessful. A recent lawsuit was successful is providing liability on the part of Up North Marina management who is keeping many of those other Marina operations off the lake. The court is now addressing the liability issue in this case.

You are the forensic accountant for the plaintiffs in the case. What documents and other information will you keep to compute damages? What will be the basis for you damage estimate? What is your theory of damages, and what are the components of your damage model?

Answer 1

ANS :

Forensic Accounting

Forensic accounting utilizes accounting, auditing, and investigative skills to conduct an examination into the finances of an individual or business. Forensic accounting provides an accounting analysis suitable to be used in legal proceedings. Forensic accountants are trained to look beyond the numbers and deal with the business reality of a situation. Forensic accounting is frequently used in fraud and embezzlement cases to explain the nature of a financial crime in court.

Forensic accountants analyze, interpret, and summarize complex financial and business matters. They may be employed by insurance companies, banks, police forces, government agencies, or public accounting firms. Forensic accountants compile financial evidence, develop computer applications to manage the information collected, and communicate their findings in the form of reports or presentations.

Along with testifying in court, a forensic accountant may be asked to prepare visual aids to support trial evidence. For business investigations, forensic accounting entails the use of tracing funds, asset identification, asset recovery, and due diligence reviews. Forensic accountants may seek out additional training in alternative dispute resolution (ADR) due to their high level of involvement in legal issues and familiarity with the judicial system.

::: Generally, the person liable for the injury (or that person’s insurance company) is responsible for reimbursing the injured party for all expenses related to their injury, as well as compensating the injured party for any pain, suffering, or emotional damage they experienced as a result of the injury. For more information about the types of damages that may be awarded in personal injury case, see the Nolo Press article, “Damages: How Much is a Personal Injury Case Worth?”

Unfortunately, the law does not provide a specific method or formula for determining the amount you’re owed. Instead, personal injury damages are based on a combination actual expenses and compensation for pain and suffering. There are many factors to be considered when determining the amount you are owed. When estimating how much an injury claim is worth, many attorneys and insurance companies use a mathematical formula to estimate the value of an injury, and determine a starting point for their negotiations. Three separate numbers need to be determined to make these calculations: special damages, medical special damages, and general damages.

Special damages are typically easy to calculate. These include costs to repair or replace damaged property, lost wages, sick or vacation time you used during your recovery, and any other out-of-pocket expenses you incurred because of the injury. You may also be compensated for lost future earnings if the injury will prevent you from being promoted to a better job, or requires you to be moved to a lesser-paying job. You are entitled to full reimbursement for your actual expenses, so be sure to keep records of all these types of expenditures.

You are also entitled to full reimbursement of medical special damages. This includes ambulances, doctor visits, x-rays, medications, etc. When determining the amount of medical special damages for negotiation purposes, many attorneys and insurance companies will use the amount billed, even if the medical bills were covered by insurance, or if, as is very common, the medical provider and insurance company eventually agreed on a reduced amount. As discussed below, the amount of medical special damages is being used to determine the severity of the injury, so it makes sense to use the billed amounts for medical treatment. When determining the amount of special damages for reimbursement in a lawsuit, you will need to be more accurate; a recent California case (Howell vs. Hamilton Meats & Provisions, 52 Cal.4th 541), limits the amount a personal injury plaintiff may recover to the actual amount paid by their insurance provider.