Expert witness: Forensic forecasts

In brief

• Relevance of profit and cash flow forecasts in litigation assignments.
• Types of case in which forecasts are likely to be important.

Information on the financial affairs of a business is important in many types of legal action, including loss of earnings or loss of profits claims, and cases in which valuations are necessary, for example shareholder disputes and matrimonial settlements. Since the available information such as financial statements and management accounts relates to the past, forensic accountants often also need profit and cash flow forecasts in many litigation assignments on which they are involved. This article highlights the types of case in which such forecasts are likely to be important.

Loss of earnings

Income projections are required for an injured self-employed claimant who has sustained a future loss of earnings and in considering ‘loss of dependency’ calculations representing the loss suffered by the dependants of the deceased