A forensic economist values losses to people and households; a forensic accountant works inside a company's records; the two meet on self-employed earnings.
An economist who measures losses to people and households: lost earnings and benefits, household services, support to survivors, and the present value of future costs, using the person's records and published labor market, demographic, and financial data.
An accountant who examines the books and records of a business: tracing funds, reconstructing transactions, quantifying commercial losses, and valuing business interests, usually from a CPA background with fraud examination or valuation credentials.
| Dimension | Forensic Economist | Forensic Accountant |
|---|---|---|
| Primary subject | Individuals and households | Businesses and their records |
| Typical questions | Lost earnings, earning capacity, death losses, present value of care | Lost profits, fraud and tracing, valuation, marital business interests |
| Core data | Tax returns, pay records, BLS and Census data, Treasury yields | General ledgers, bank records, financial statements, transaction data |
| Professional standards | NAFE and AAEFE ethics statements and the forensic economics literature | AICPA, NACVA, and ACFE standards |
| Where the two meet | Self-employed earnings, death of a business owner | Owner compensation, discounting of lost profits |
Retain the economist when the loss belongs to a person or a household: an injured worker's earnings, a decedent's support to survivors, the value of household work, or the present value of a life care plan. The economist also discounts any future stream, including lost profits, once the stream has been established.
Retain the forensic accountant when the question lives inside a company's records: whether money was diverted and where it went, what a business earned before and after an event, how owner compensation should be normalized, or what an interest in the business is worth under a stated standard of value.
Both disciplines quantify financial loss from documents and both testify to it. They meet in the self-employed claimant, whose tax returns mix labor income with the return on the business, and in the death of an owner, where the survivors' loss depends on both the owner's earnings and the company's prospects. Under one roof the practice fields both, and the report identifies which discipline's method was applied to each component so the foundation for every figure is clear.
Some practitioners hold training in both fields and can address both sets of questions. Whether one expert or two is better depends on the case: a matter with a personal loss and a business loss often benefits from an expert for each, with the reports reconciled so the same revenue is not counted twice.
Business valuation is a valuation discipline governed by professional standards, and the valuator is usually credentialed in valuation regardless of whether the background is accounting or economics. The economist typically handles the income determination and support analysis in the same matter.
Either expert can, and the method is the same. What matters is that the discount rate reflects the risk of the projected profits and that the person who built the projection and the person who discounted it used consistent assumptions.
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