oct ewj 24 online - Flipbook - Page 67
Personal Injury Claims
and Forensic Accountants
by Raymond Davidson
Raymond has been specialising in Forensic Accounting and Litigation work for over 30 years,
is a Fellow of the Institute of Chartered Accounts in England and Wales and trained by the
Academy of Experts to act as a Mediator.
Personnel file, including written agreements for
incentive-based pay
When is a Forensic Accountant required?
A Forensic Accountant is usually required to assist with
a claim arising from personal injury where a loss is suffered by those who are self-employed or owner managers of businesses or employees with complicated
remuneration packages, or where the loss is suffered
by a business rather than an individual.
l
l Employee benefit guides
l Pension documents
What does the Forensic Accountant use to forecast
earnings?
Types of documents that are useful in forecasting
earnings for a business owner had the accident not occurred include:
l Articles of association and shareholders agreements
Similarly, forensic accountants are often required
where an accident may have resulted in death or in
the inability post-accident to continue in the same
occupation.
l Annual financial accounts
Our work would include an assessment of pre and
post-accident trends. Typically this would include research of the claimant’s business or employer and the
markets and industries in which it operates and the
prospects for the business.
l Copies
of corporation tax returns with supporting
attachments and schedules
l Sales and customer orders on a monthly or periodic
basis
What is included in the claimant's claim?
An assessment of an claimant’s lost earnings should
consider the following:
l probable earnings stream had it not been for the
accident
l Monthly/Quarterly management accounts
l Payroll records
Documents specific to the type of business or
industry
l
Mitigation of loss
Injured claimants must undertake a reasonable effort
to mitigate their losses, and the following key questions can help establish the magnitude of the impairment, if any, along with his or her efforts:
l actual earnings following the event
l residual earnings capacity that could have been
attained with mitigation
l offset for any savings in personal consumption
expenditures that are no longer being incurred, and
l Do the injuries preclude the individual from work-
l increased
education, retraining, or other costs incurred to accomplish mitigation
ing on a part-time or full-time basis in the same job as
prior to the accident?
What information and documentation is required by
the Forensic Accountant?
For claimants deriving compensation in the form of
employee wages and employer paid benefits, the following information specific to the individual may be
useful in determining the earnings had the accident
not occurred:
l With treatment for the injuries, is the individual able
to continue working in the same or a similar job
either on a part-time or full-time basis?
l Does the individual possess any education knowledge and/or skills that may transfer to another
vocation?
l Has the individual undertaken any efforts since the
Educational attainment and anticipated future
education
l
accident to find substitute employment?
l Will the injuries force the individual to retire from
work at an earlier date than originally planned?
Employment history, including promotions and
wage increases
l
l Is it anticipated that the injuries will have a negative
l Anticipated date of retirement
impact on their individual’s life expectancy?
l Copies
of Income Tax returns along with supporting attachments and schedules
Costs no longer being incurred
Earnings for an injured individual should be adjusted
downwards for costs related to his or her employment
that are no longer being incurred. For example:
l Copies of payslips and forms P60 (Year end
summaries)
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