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Loss of profits cases: the forensic accountant’s role

21 February 2019 / George Sim
Issue: 7829 / Categories: Features , Profession , Expert Witness
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George Sim looks at the ways in which a forensic accountant can add value

  • Determining a loss of profits.
  • Addressing potential difficulties.

A business may suffer a loss of profits through breach of contract or tort (eg negligent installation of machinery), or as a result of events such as floods. In these situations solicitors may need to obtain advice and possibly an expert report expressing an opinion on the quantum of the losses.

External & internal factors

Forensic accountants will establish how a business earns its income and the nature of the costs it incurs. They will consider the circumstances of a loss which is the subject of a claim, reviewing external factors such as markets and the general business environment and internal factors such as management, cost structures and plans for the business.

Reviewing external factors involves putting the claim into the context of the claimant’s general financial position. It will be important to consider sales in the claimant’s business sector at the relevant

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