Accounting malpractice

Article

Accounting malpractice

Dispute Services

The introduction of commonly accepted accounting standards aims at ensuring accurate and reliable presentation of financial information, in particular past results of business operations and state of associated assets and their funding sources. However, like with any complex set of rules, the irregularities in the accounting function of companies tend to occur. When they take the form of suspected accounting malpractice, prompt actions should be taken to minimize the risk and monetary losses in the enterprise.

The common instances of accounting malpractice include:

  • maintaining substandard financial records;
  • preparing incorrect financial statements; 
  • misuse in managing or disposing of company’s assets;
  • abuse of employer’s trust, including fraud. 

We support our Clients throughout all the stages of dealing with the suspected accounting malpractice by offering:

  • forensic accounting combined with e-discovery services for the purpose of obtaining evidence of committed malpractice;
  • estimation of monetary losses suffered due to the malpractice for the purpose of litigation proceedings, if formal charges are to be pressed; and
  • guidance on corrective actions allowing for the improvement of the financial security of the company.

Type of dispute: Accounting malpractice, Post M&A disputes, Shareholder disagreements

Type of proceedings: Litigation

Our role: Party-appointed expert

Industry: Construction & Infrastructure

Our services: Analysis of selected financial aspects of the operations of a construction company being subject to M&A transaction in the dispute brought by the buyer - a Polish construction group (Claimant) - concerning the execution of a put option (granted to the founder and former president of the management board) for a minority stake in the company (Respondent). The majority shareholder refused to accept the execution of the put option on the grounds of alleged accounting malpractice leading to the overstatement of purchase price by the previous owner.
Preparation of several comprehensive expert reports for the Respondent, which included i.a.: (i) review of market practices of accounting for construction contracts, (ii) commentary on valuation-related aspects of the target’s shares, (iii) challenging the factual findings of Claimant’s investigation based on an extensive review of voluminous documentation.

Type of dispute: Accounting malpractice, Shareholder disagreements

Type of proceedings: Negotiation & mediation

Our role: Advisor

Industry: Consumer

Our services: Analysis of selected financial aspects of the operations of an online shopping retailer where the minority shareholder suspected accounting malpractice concerning company’s transactions with the entities related to the majority shareholders.

Type of dispute: Accounting malpractice, Post M&A disputes, Shareholder disagreements

Type of proceedings: Arbitration

Our role: Advisor

Industry: Construction & Infrastructure

Our services: Assistance to a majority shareholder of a street lighting services company (a private-equity fund operating in CEE), in a financial analysis of potential claims arising from the breaches of SPA by former owners and current minority shareholders. Followed by drafting a statement of claim for the purpose of arbitration as the initial negotiations failed.

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