Clues to a Ruse: Hidden Money and the Forensic Accountant

Hidden Money and the Forensic Accountant

My spouse operates a predominantly cash business and cash flow is drying up. 

My spouse has a business and there are new significant expenses.

My spouse is claiming large loans from friends or family. 

My spouse is diverting funds into a trust.

My spouse claims that they need to quickly sell the business to partners. 

A family lawyer who has handled many divorce cases can often spot such attempts to hide money. Generally, they can be detected through bank records, credit cards, mortgage statements, investment accounts, corporate and business records. However, tracing all missing assets can be complex and when there are real concerns about money gone astray after separation, it may be worth hiring a forensic accountant.

What is a forensic accountant?

Think ‘CSI: Bookkeeper Edition’. A forensic accountant is an expert in reviewing various types of records and statements, and traces dollar for dollar the origins of what came in and what went out. Most significantly, a forensic accountant reviews the expenses and overhead of a business, and whether the bank records, bills and invoices line up with actual earnings. The result? Shortfalls in the profits of a business can be identified and hidden money can be traced.    

What are the pros and cons of hiring a forensic accountant?

In terms of pros, a forensic accountant:

  • is an expert who can testify at a family law trial.
  • may be able to find hidden money which can lead to increasing the amount paid in a divorce settlement.
  • can be used to attack the credibility of the spouse hiding the assets.
  • can be used to impute income to the spouse who is hiding the money, leading to an increase in child support and spousal support.

Regarding cons, a forensic accountant:

  • is expensive. Depending on the complexity of the case, the cost can be $30,000-$300,000.
  • may not find that money has been hidden, or money hidden may be less than the forensic accountant fee. 
  • requires time, perhaps many months to complete an investigation. 

Concerned your spouse is hiding money after separation and divorce? The Legal Navigators at Coach My Case can recommend a forensic accountant to track the clues of the ruse. Contact us today.