Forensic Accounting - Compliance with GAAP and GAAS

Forensic Accounting – Compliance with GAAP and GAAS

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Overview
Case & Project Experience
Associated Professionals

The work performed by accountants often comes under scrutiny. For example, financial institutions may question whether a CPA adequately followed professional standards in an audit where significant loan losses were experienced, or a class of shareholders may challenge whether a company’s external accounting firm followed professional standards if the company had restated its financial results, or a regulator may query whether a CPA acquired sufficient audit evidence in performance of services for a client. The Hemming Morse team has significant expertise and experience performing accounting services such as these, which enables us to objectively and critically evaluate any claims related to such services. Our clients benefit from the investigative expertise of a staff of seasoned professionals to conduct appropriate investigations, analyze issues, report findings, consult with counsel, and testify in both civil and criminal proceedings, if necessary.

Our professional services include:

Accountants’ professional liability-related investigations and consulting involving questions of compliance with Generally Accepted Auditing Standards (“GAAS”) established by the American Institute of Certified Public Accountants (“AICPA”), Public Company Accounting Oversight Board (“PCAOB”) Auditing Standards, and Generally Accepted Accounting Principles (“GAAP”)
Bankruptcy-related investigations, including those involving questions of accountants’ professional liability, solvency, and/or alleged fraudulent conveyances
Calculations requiring the application of GAAP or other financial reporting frameworks arising from business disputes, including merger or employment-related allegations
Complex GAAP and International Financial Reporting Standards (“IFRS”) accounting consultations
Monitoring and related evaluation of internal controls
Shareholder-related investigations involving questions of corporate compliance with GAAP, IFRS, and internal control over financial reporting (“IFRC”) required under the Sarbanes-Oxley Act of 2002 (“SOX”), including expert consulting in connection with securities class actions and other claims
Testimony at trial or other proceedings, including development of schedules and graphics to clearly communicate complex issues

We provide an objective and knowledgeable assessment of applied professional standards, fortifying our opinions and conclusions with extensive research, data and investigation, our experts’ experience, and diverse resources across the firm. Due to its experience and expertise in forensic accounting matters such as those described below, Hemming professionals have evaluated financial reporting and the independent financial statement audits of publicly traded and privately held companies across various industries, including aerospace, biotechnology, energy, financial services, retail, manufacturing, oil and gas, pharmaceutical, and technology businesses.

Accountants’ Professional Liability – Evaluating Claims Against An Auditor

Following allegations of audit failure by a plaintiff auditor, a representative of the professional accounting firm hired Hemming Morse to conduct an evaluation of relevant financial statement audits for purposes of assessing the validity of such allegations. Our professionals provided expert consulting services evaluating whether the auditing services rendered by the accounting firm complied with GAAS established by the AICPA.

Investigation of Claims Against External Auditor by Special Litigation Committee

Hemming Morse was retained by outside counsel for a company’s Special Litigation Committee formed at the request of shareholders. In this instance, the shareholders wanted the company to pursue claims against its external auditor following a restatement of the company’s financial statements. We assisted outside counsel in the collection and analysis of data, as well as interviews of relevant stakeholders. Hemming Morse’s analyses and conclusions, along with those of outside counsel, were provided to the Special Litigation Committee, and used to inform the committee’s decision regarding the appropriate course of action.

Securities Claims

In connection with a class action dispute involving a publicly traded company’s accounting for share-based compensation, Hemming Morse was retained to analyze the company’s compliance with the relevant GAAP provisions, with a Hemming expert ultimately providing testimony regarding his analysis, findings, and opinions.

Accountants’ Professional Liability – Claims Against Auditor

In connection with concerns as to post-bankruptcy claims that may be initiated against a company’s auditor, Hemming Morse was retained to evaluate whether multiple financial statement audits had been performed in accordance with applicable professional standards. Hemming Morse professionals evaluated whether professional services rendered by the accounting firm complied with PCAOB Auditing Standards, ultimately providing expert testimony as to its findings.

Regulator Actions

Hemming Morse has been engaged by several different regulators, including the SEC, FDIC, and PCAOB, to evaluate adherence with professional auditing and/or accounting services standards. In connection with these services, the Hemming team has provided expert consulting services in connection with several areas of GAAP, including accounting for loans, investments, inventory, fixed assets, and revenue recognition.