The Expert Forensic Accountant’s Predictions for the next 12 months in litigation support and dispute resolution

2023 has been a busy time for the FRP forensic services team. We have seen an uptick in enquiries for forensic investigations and in relation to our dispute services. Our partners are all accredited expert witnesses whom are regularly instructed and give evidence as party or single joint experts in commercial, family and shareholder disputes, and/or arbitration as well as in expert determination.

In 2023 we have been instructed by regional law firms and also magic circle and global firms.

As we go into 2024, my predictions for the nature of instructions includes an uptick in the following areas.

Investigations including fraud and regulatory issues. In times of economic turmoil, we typically see an uptick in investigations including in respect of suspected fraud or insolvency. We may also see investigations arising due to regulatory issues. Typically cases involving fraud and regulatory concerns must be investigated expediently in order to take recovery actions and to minimise actions by regulatory bodies.

In recent months we have been engaged on a number of matters following the appointment of administrators and we expect such investigations to continue.

I have been recently instructed on a couple of business frauds undertaken by employees. Typically, fraud by employees increases in times of financial challenge.

Post business acquisition disputes and warranty claims 2022 and 2021 have been buoyant times for business sales. Many of the deals will have been negotiated off the back of positive trading results. The deals may have included deferred or contingent consideration. Trading performance may have deteriorated since the deal. Inflationary cost pressures, supply chain issues, increased finance costs and falling consumer demand may have impacted the recent trading results. In such situations the buyer may look to recover part of the consideration paid or to avoid paying deferred consideration.

I have already been instructed on a number of disputes arising out of SPAs (sale and purchase agreements) and warranty claims. As a result of our assistance a number of these have settled at an early stage in the dispute avoiding protracted costly litigation and allowing the buyers management to focus on the ongoing business.

Complex valuations

In early 2020, the onset of covid_19 and the lockdowns added an extra layer of complexity to company valuations. Some businesses were severely impacted by the global lockdowns whilst other businesses experienced increased consumer demand. Since the pandemic some industries have seen a “post-Covid bounce”. In recent months the rapid cost inflation, bank interest rate increases, supply chain issues and the concerns regarding recession and political uncertainty in both the UK and globally mean that company valuers need to factor in even more complex variables and uncertainties.

We are regularly instructed to value businesses in relation to commercial disputes, family and shareholder disputes and insurance claims. In recent times we have seen an increase in the need for updating valuation reports to reflect the changing trading conditions and economic climate.

Professional negligence claims

As forensic accountants we are regularly instructed in respect of claims against auditors, accountants and tax advisers. We are seeing an increase in claims following business insolvencies and fraud on companies. We provide expert opinion and litigation support for either the claimant or defendant. We are regularly instructed by professional indemnity insurers to assess the strength of a claim both in terms of causation and quantum.

I have recently been instructed on cases regarding alleged insolvency, failed tax planning including tax schemes and alleged failing in auditing standards.

I anticipate with an increase in corporate failures over the next year we will see further claims against the company auditors and advisers.

So in conclusion, I am expecting we will continue to be busy in 2024 with a continuing trend in disputes arising from the volatile economy and corporate failures.

My recent notable assignments include:

• Instructed as party expert in a family dispute regarding a large group of companies.

• Instructed in an expert determination following a dispute regarding deferred contingent consideration on a company sale.

• Undertaking a forensic investigation into accounting discrepancies regarding cash sales in a hospitality group.

• Acting as party expert on a professional negligence claim against the auditors following the insolvency of a group of companies.

• Acting as Single Joint Expert in relation to a divorce whereby the parties had a number of shareholdings in UK and international businesses and property investments. ■

Fiona Hotston Moore

Partner FRP Forensic Services

+44 (0) 7770 642491 fiona.hotstonmoore@frpadvisory.com

Fiona Hotston Moore -Forensic Accountant/Expert Witness|LinkedIn

Fiona is a partner of FRP's Forensic Services practice. Fiona specialises in commercial disputes, business valuations, tax disputes, personal injury and professional negligence matters including giving evidence in the High Court, Family Court, Arbitration and Tax Tribunal. She has been instructed as an Expert in approximately 300 cases in her career to date.

Fiona is also often instructed to provide expert opinion on a range of matters including shareholder disputes, contract disputes and insurance claims, tax disputes, officer and employee fraud, auditor and tax adviser professional negligence claims.