Fraud and tracing analysis applied to commercial contract dispute litigation: methodology, deliverables, and case-specific considerations.
A contract dispute can involve a forensic accounting question alongside the damages question: whether revenue was reported as the contract required, whether costs charged to a project were actually incurred, or whether payments went where the contract directed. The economist reconstructs the flow of funds from the ledger, bank records, and third-party documents, compares it with the contract's terms, and quantifies any shortfall or misapplication by period. The findings support the damages analysis and can stand on their own as an accounting of what was paid, received, and retained.
Forensic accounting for embezzlement, misappropriation, and financial statement irregularities. The work reconstructs the flow of funds through bank, ledger, and payment records, traces diverted assets to where they came to rest, quantifies the loss for each scheme identified, and documents the evidence trail so it can support a civil claim, an insurance recovery, or a referral to authorities.
The claim typically consists of lost profits on the contract itself, measured as the revenue that would have been earned less the costs that would have been incurred to earn it; lost profits on related business that depended on the contract, where the record supports the connection; reliance costs incurred in preparation for performance; and in some matters the diminished value of the business when the breach reduced its ongoing earnings capacity. The drivers are the contract and its performance history, historical financial statements and tax returns, budgets and projections prepared before the dispute, customer and pricing records, and the cost structure that determines what portion of lost revenue would have been profit.
We issue the final report and provide deposition and trial testimony, support for insurance or restitution claims, and rebuttal of opposing accounting analyses.
The revenue, costs, and payments the contract governs, rebuilt from the general ledger, invoices, bank records, and the counterparty's records where available, and compared with what the contract required. The report quantifies differences by period and ties each to a document.
The reconstruction establishes what actually happened under the contract; the lost profits analysis projects what would have happened had it been performed. The two share the same records, and the report keeps the actual and the but-for figures separate so each can be examined.
Request a consultation on Fraud & Tracing or call (201) 343-0700. Plaintiff and defense counsel.