Forensic Accountants and Their Role in a Divorce

Divorces in California are often complex, especially with regard to the division of community property. Under the California Family Code, most assets and debts acquired during the marriage are considered community property and typically must be divided equally between the spouses in divorce. Yet the process of asset identification and valuation can be difficult, particularly in circumstances where one spouse has taken intentional steps to conceal property or its true value. In such circumstances, forensic accountants can be crucial to ensure that all community property is accurately identified and valued, and distributed between the spouses according to California law.

What is a forensic accountant, and what is the precise role of a forensic accountant in a divorce? Consider the following information from our San Jose divorce lawyers.

Understanding the Job of a Forensic Accountant 

Forensic accounting, according to the California Society of Certified Public Accountants, is “a niche area where accounting intersects with investigative work.” More specifically, “forensic accountants scrutinize financial documents to uncover fraud, wrongdoing, and other anomalies that might suggest unlawful or unethical behavior.”

In short, forensic accountants are important in various circumstances in divorce proceedings, including circumstances in which assets may have been concealed, values of assets underreported, and/or the nature of assets inaccurately disclosed.

Role of a Forensic Accountant in a Divorce

Forensic accountants can play particularly important roles in divorces where there are concerns about one spouse having greater control over certain community property during the marriage and potentially taking steps to underreport values or hide certain assets altogether for the purposes of gaining an unfair distribution of community property in the divorce. In order to ensure that all community property is accurately identified, valued, and distributed between the spouses, forensic accountants can be employed to perform the following important tasks:

• Locating or identifying hidden or concealed assets, which can mean tracing assets that have been placed into separate domestic or international bank accounts, or potentially transferred to friends or business partners;
• Tracing assets to clarify whether certain property should be classified as community property or separate property; and
• Providing valuations of certain assets to reveal an incorrect valuation presented by a spouse. If the forensic accountant is unable to value a particular asset, they may rely on a valuation prepared by another expert, such as a real estate appraiser, and incorporate that valuation into their report showing what the correct division of assets should be in the divorce.

In sum, among the essential functions of a forensic accountant in a divorce is to ensure that all community property is accurately identified and valued so that it can be distributed to the spouses based on the requirements set forth under California law. This is just one example of an issue a forensic accountant can be employed to address.

Contact Our San Jose Divorce Lawyers to Learn More About How a Forensic Accountant Can Play an Important Role in Your Case

Do you have concerns about your spouse’s disclosure of all assets that should be classified as community property and thus divisible in your divorce? As we discussed above, a forensic accountant may be able to identify and trace assets,  as well as to clarify valuations of certain assets that may have been undervalued by your spouse with the aim of retaining more property than what they are entitled to receive under California law. An experienced San Jose divorce attorney at Foster Hsu, LLP can provide you with more information about forensic accountants in divorce cases and in yours specifically, and we can begin working with you on your divorce case today. Contact us to find out more about how our firm can assist you.

Sources:

calcpa.org/become-a-cpa/forensic-accounting

leginfo.legislature.ca.gov/faces/codes_displayexpandedbranch.xhtml?tocCode=FAM&division=7.&title=&part=&chapter=&article=&nodetreepath=9