Why Use a Written Engagement Letter? Here are good reasons

18 Key Elements in Financial Experts’ Engagement Letters & Written Reports

on: August 21, 2018In: No Comments

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Engagement letters and written reports from financial experts deserve special attention in family law cases. Including these 18 elements can help family lawyers to win their financial cases.

By Ken Stalcup and Craig Cwynar, Financial Experts

“The single biggest problem in communication is the illusion that it has taken place.” – George Bernard Shaw

Best case scenario: The financial expert prepares a bullet-proof, understandable, well-reasoned, impartial, and supported report.

Worst case scenario:  The financial expert produces a 452-page sleeping pill that cannot be explained to the average layperson in five minutes.

Whether the engagement is a forensic accounting project or a business valuation engagement, properly written communications will bend the arc away from those worst-case scenarios and more towards the best-case scenarios with the best possible outcomes for your client.

A Financial Expert’s Engagement Letter Should Address the Essential Elements of the Project

All financial experts should use written engagement letters. After discussing all the case elements until all parties are satisfied, the financial expert should draft an engagement letter.

The engagement letter should typically be addressed to the attorney. This may allow the attorney to cover the work product with attorney-client privilege in the early stages of the engagement. The engagement letter should identify all the parties involved, the significant elements of the work and the scope of the project. The letter should also disclose the professional standards to be followed and the fees charged by the expert.

Ideally, the engagement letter will address the essential elements of the project but will remain flexible enough to allow the financial expert to investigate new avenues of interest that may develop, particularly in a forensic accounting engagement.

Business Valuation Reports

If you are asking for a business valuation report or reviewing a report from the other side, a good business valuation report will include the following elements:

1. General information on the Valuation Assignment:  The general information will include the names of the individuals and business interests involved, the date of value and percentage interest being valued.  The report should also indicate the purpose of the valuation, the standard of value and premise of value used.
2. Information on the Subject Company:  A good valuation report will include extensive research on the company, its owners, its tax status, the entity type and the service or products sold.  A well-written report should also describe any buy/sell agreements and any restrictions on transfers of the equity interests. The appraiser will usually visit the site of the business and include pictures obtained from the visit.
3. Economic Outlook:  A business valuation report should contain an analysis of the national, regional and local economic trends at the date of value.  The information should be relevant to the understanding of the economic trends that affect the value of the subject company.
4. Financial Analysis of the Subject Company:  It’s typical to expect to see five years of financial data presented in a valuation report.  The financial data will typically include a balance sheet, an income statement, financial ratios and a comparison of the subject company’s data to industry averages.  The valuation expert should also disclose key findings in a written analysis of the financial information.
5. Valuation Approaches:  It’s important to consider and identify all the valuation approaches.  The valuation expert should identify #1) An asset approach, #2) A market approach, and #3) An income approach.  If a particular approach is not used, the valuation expert should explain why. It’s also important to consider discounts.  Generally, valuation experts will consider discounts for a lack of control and discounts for lack of marketability. Each discount should be explained and supported by empirical evidence.  The ultimate conclusion of value should be expressed as a specific number or a range of values.
6. Statement of Assumptions and Limiting Conditions:  This statement will typically contain numbered paragraphs that explain the approaches and conditions affecting the valuation process.
7. Exhibits:  The report should be supported by detailed exhibits referenced in the written report.
8. Appraiser Certifications:  This certification references standards and affirms that the report is true and correct.  The appraisers will certify they are unbiased and have no prospective interest in the property being valued.  The certification should be signed by the appraiser(s).
9. Appraiser Biographies:  The appraisers should provide a summary of their credentials and experience.  Look for one of the following credentials: ABV-Accredited in Business Valuation  ASA-Accredited Senior Appraiser or a CVA-Certified Valuation Analyst.

Forensic Accounting Reports

If you are asking for a forensic accounting report or reviewing a report from the other side, a good forensic accounting report will include the following elements:

1. Forensic Accountant’s Letter:  This letter will outline the nature and duration of the engagement and the professional standards followed. The report will typically indicate that the forensic expert was compensated on a flat, hourly rate that was not dependent on any finding or conclusion. The report should be signed by the forensic accountant.
2. Executive Summary:  This section of the report should summarize the entire report, the findings, and recommendations.
3. Background:  The report should identify the parties, the nature of the case, and the disputed facts.
4. Scope:  The scope, in terms of dates and data analyzed, should be disclosed.  For example, “We reviewed the cash disbursements between March 5th and October 9th 2017.  This includes all Bates stamped documents from A001 to A941.”
5. Procedures:  This section of the report will outline the nature of the tests or work performed.  A standard approach will identify the purpose of the procedure, the individual steps undertaken, and individual conclusions reached as a result of the work performed.
6. Conclusions or Findings:  While the forensic expert should not state a determination of guilt or innocence, the expert can state objective, overall findings, and conclusions about the work completed.
7. Recommendations:   The expert can make recommendations to the client as to future actions to be taken or avoided.
8. Exhibits:  The report should be supported by detailed exhibits referenced into the written report.
9. Forensic Accountant’s CV:  This document should summarize the credentials and experience of the forensic expert.  Look for the following credentials: CPA, a Certified Public Accountant, CFE-Certified Fraud Examiners, or CFF-Certified in Financial Forensics.

Engagement letters and written reports from financial experts deserve special attention in family law cases. An engagement letter will focus the financial expert’s efforts on the significant elements of the work, and a well-written report will help you win your financial case. While the written reports express the intent and opinion of the financial expert, the attorney should understand and carefully review each document to provide legal input from start to finish.

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Ken Scalup, CPA, CFE, CFF, ABV,  is a Senior Director with Houlihan Valuation Advisors, a national firm of consultants providing business valuation and economic strategy services. Craig Cwynar is a valuation analyst with Houlihan Valuation Advisors.  www.houlihan-hva.com

Working Through a Collaborative Divorce? Get Creative!

For many couples, collaborative divorce is an attractive alternative to divorcing through litigation. With a collaborative divorce, the couple works together – each with their own individual lawyer – to draft the divorce settlement that best fits their needs. This means they can go outside the guidelines for property division, alimony, and parenting plans imposed by Florida law to create an arrangement that truly suits their unique needs and family dynamics. If you are considering a collaborative divorce for this reason, though, it is always in your best interest to discuss the law’s divorce guidelines with an experienced lawyer to understand why they exist and how you can avoid creating a divorce settlement that goes against your interests.

 

Tell your Spouse What you Really Want

 

Under Florida law, a divorcing couple’s marital assets are divided according to the doctrine of equitable distribution. This means they are not necessarily divided equally, but according to each partner’s personal needs.

 

With a collaborative divorce, you and your spouse decide how you want to divide your marital assets. If you really want a specific asset, like ownership of your vacation property, use this opportunity to voice your preference and what you are willing to “give up” in order to achieve your divorce goal. You can even come up with creative ways to split your assets, like sharing the vacation property with a timeshare-like agreement.

 

Create a Custom Parenting Plan for your Children

 

When the court develops a parenting plan, it follows the guidelines set in Florida law to develop the plan that best serves the child’s personal needs. Creating a plan that is in your child’s best interest is always something you should strive to do.

 

But when you are in charge of your parenting plan, rather than the court, you have more flexibility and control to create the plan that works best for your family. In many cases, this is easiest when you have help from a child custody evaluator. The parenting plan you develop might deviate a lot from the “typical” shared parenting plan like the child spending the bulk of his or her time with one parent and every other weekend with the other parent. Yours might involve split weeks or even a modern take on coparenting like a birdnesting arrangement. With a collaborative divorce, you craft the parenting plan that suits your family’s needs.

 

Find Ways to Create a Settlement that Makes you Both Happy

 

Maybe you would rather take a larger share of your marital savings than seek alimony. Or maybe you want to liquidate as much of your marital assets as possible and use the funds to start fresh on the next chapter of your life. These types of arrangement are possible with collaborative divorce. The only limit to your ideal, self-directed settlement is your spouse’s willingness to work cooperatively with you to reach it.

 

Work with an Experienced Winter Park Divorce Attorney

 

If you are considering a collaborative divorce, work with a Winter Park divorce lawyer who has extensive experience handling this type of divorce. Contact our team at Sperling Ducker PLC today to set up your initial legal consultation with a member of our team.

 

http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0000-0099/0061/Sections/0061.075.html

 

 

Relocation with your Child

When a client called today to discuss relocation, I thought I should ad a Relocation note to this blog.

 

 As you review, please realize there is no consideration for high assets or significant income inequality in consideration under these rules.

 

Relocation is covered by Florida Statute 61.13001. In the absence of an agreement between the parties, a court must answer the following questions in order to determine Relocation is in the Best Interests of the Child. (Best Interests of the Child is the standard, NOT best interests of the Adult)

the court shall evaluate all of the following:

(a) The nature, quality, extent of involvement, and duration of the child’s relationship with the parent or other person proposing to relocate with the child and with the nonrelocating parent, other persons, siblings, half-siblings, and other significant persons in the child’s life.

 

(b) The age and developmental stage of the child, the needs of the child, and the likely impact the relocation will have on the child’s physical, educational, and emotional development, taking into consideration any special needs of the child.

 

(c) The feasibility of preserving the relationship between the nonrelocating parent or other person and the child through substitute arrangements that take into consideration the logistics of contact, access, and time-sharing, as well as the financial circumstances of the parties; whether those factors are sufficient to foster a continuing meaningful relationship between the child and the nonrelocating parent or other person; and the likelihood of compliance with the substitute arrangements by the relocating parent or other person once he or she is out of the jurisdiction of the court.

 

(d) The child’s preference, taking into consideration the age and maturity of the child.

 

(e) Whether the relocation will enhance the general quality of life for both the parent or other person seeking the relocation and the child, including, but not limited to, financial or emotional benefits or educational opportunities.

 

(f) The reasons each parent or other person is seeking or opposing the relocation.

 

(g) The current employment and economic circumstances of each parent or other person and whether the proposed relocation is necessary to improve the economic circumstances of the parent or other person seeking relocation of the child.

 

(h) That the relocation is sought in good faith and the extent to which the objecting parent has fulfilled his or her financial obligations to the parent or other person seeking relocation, including child support, spousal support, and marital property and marital debt obligations.

 

(i) The career and other opportunities available to the objecting parent or other person if the relocation occurs.

 

(j) A history of substance abuse or domestic violence as defined in s. 741.28 or which meets the criteria of s. 39.806(1)(d) by either parent, including a consideration of the severity of such conduct and the failure or success of any attempts at rehabilitation.

 

(k) Any other factor affecting the best interest of the child or as set forth in s. 61.13.

 Of course, (k) introduces a completely new set of factors for the court to consider in determining the Best Interests of the Child.

Section (3) of Florida Statutes 61.13 is as follows:
For purposes of establishing or modifying parental responsibility and creating, developing, approving, or modifying a parenting plan, including a time-sharing schedule, which governs each parent’s relationship with his or her minor child and the relationship between each parent with regard to his or her minor child, the best interest of the child shall be the primary consideration. A determination of parental responsibility, a parenting plan, or a time-sharing schedule may not be modified without a showing of a substantial, material, and unanticipated change in circumstances and a determination that the modification is in the best interests of the child. Determination of the best interests of the child shall be made by evaluating all of the factors affecting the welfare and interests of the particular minor child and the circumstances of that family, including, but not limited to:

(a) The demonstrated capacity and disposition of each parent to facilitate and encourage a close and continuing parent-child relationship, to honor the time-sharing schedule, and to be reasonable when changes are required.

 

(b) The anticipated division of parental responsibilities after the litigation, including the extent to which parental responsibilities will be delegated to third parties.

 

(c) The demonstrated capacity and disposition of each parent to determine, consider, and act upon the needs of the child as opposed to the needs or desires of the parent.

 

(d) The length of time the child has lived in a stable, satisfactory environment and the desirability of maintaining continuity.

 

(e) The geographic viability of the parenting plan, with special attention paid to the needs of school-age children and the amount of time to be spent traveling to effectuate the parenting plan. This factor does not create a presumption for or against relocation of either parent with a child.

(f) The moral fitness of the parents.

 

(g) The mental and physical health of the parents.

 

(h) The home, school, and community record of the child.

 

(i) The reasonable preference of the child, if the court deems the child to be of sufficient intelligence, understanding, and experience to express a preference.

 

(j) The demonstrated knowledge, capacity, and disposition of each parent to be informed of the circumstances of the minor child, including, but not limited to, the child’s friends, teachers, medical care providers, daily activities, and favorite things.

 

(k) The demonstrated capacity and disposition of each parent to provide a consistent routine for the child, such as discipline, and daily schedules for homework, meals, and bedtime.

 

(l) The demonstrated capacity of each parent to communicate with and keep the other parent informed of issues and activities regarding the minor child, and the willingness of each parent to adopt a unified front on all major issues when dealing with the child.

 

(m) Evidence of domestic violence, sexual violence, child abuse, child abandonment, or child neglect, regardless of whether a prior or pending action relating to those issues has been brought. If the court accepts evidence of prior or pending actions regarding domestic violence, sexual violence, child abuse, child abandonment, or child neglect, the court must specifically acknowledge in writing that such evidence was considered when evaluating the best interests of the child.

 

(n) Evidence that either parent has knowingly provided false information to the court regarding any prior or pending action regarding domestic violence, sexual violence, child abuse, child abandonment, or child neglect.

 

(o) The particular parenting tasks customarily performed by each parent and the division of parental responsibilities before the institution of litigation and during the pending litigation, including the extent to which parenting responsibilities were undertaken by third parties.

 

(p) The demonstrated capacity and disposition of each parent to participate and be involved in the child’s school and extracurricular activities.

 

(q) The demonstrated capacity and disposition of each parent to maintain an environment for the child which is free from substance abuse.

 

(r) The capacity and disposition of each parent to protect the child from the ongoing litigation as demonstrated by not discussing the litigation with the child, not sharing documents or electronic media related to the litigation with the child, and refraining from disparaging comments about the other parent to the child.

 

(s) The developmental stages and needs of the child and the demonstrated capacity and disposition of each parent to meet the child’s developmental needs.

 

(t) Any other factor that is relevant to the determination of a specific parenting plan, including the time-sharing schedule.

 

Again, the court is allowed to consider "ANY OTHER FACTOR THAT IS RELEVANT!"

 

It is imperative to have an attorney that understands these factors and how to present evidence on each one.

 

Call today: 407-645-3297 or visit Aubreylaw.com for a consultation on your particular case!

10 Hours in Mediation?

Last Thursday, I spent 10 hours in mediation with a client. We came prepared to settle the matter, but it took until afternoon for the other side to even give us the "number" they were seeking. At the end of the day, no resolution occurred, primarily because everyone was too tired to spend the time reviewing the Marital Settlement Agreement. Sometimes parties choose the wrong attorney to represent them. Other attorneys are stuck working to educate the client when their attorney sets up unreasonable expectations.

In thinking about this, I came across the following article I wrote more than 8 years ago.

Ring That Bell

There are many ways to ring a bell. The large Wheel in the background is attached to a one-inch rope passing from the steeple of the First Baptist Church in America to the Music Director's office. Pulling the rope rotates the bell to strike the large "ball clapper." In this manner the bell rotates and the clapper is relatively stationary. The use of a one inch rope, indicates the weight of the bell and the potential momentum imparted to the person pulling on the rope.

The steeple also has a clock. The clock has a mechanism to ring the bell on the hour and 1/2 hour by use of the "hammer or "alternate clapper." The clock mechanism can't produce the force necessary to move the entire bell, thus the use of a much lighter hammer.

The hammer also attaches to a much smaller rope passing from the steeple to the interior of the church. Pulling the much smaller rope rings the bell, but the bell remains relatively stationary.

All this to say there are many ways to ring a bell.

There are also many ways to pursue your legal rememdy. Choosing an attorney who understands the differences between Litigation and Mediation, between Fighting it Out and Working it Out, can mean the difference between years of litigation and moving on with your life.

Posted by Aubreyslaw at Tuesday, August 04, 2009 No comments: Links to this post