Bankruptcy and Financial Distress Litigation

Forensic Accounting and Financial Analysis

The fields of economics and accounting are closely entwined and, in the area of securities, they frequently intersect. In some situations (such as financial statement analysis or valuations), an accountant can provide insight into how data should be correctly interpreted, including how to make adjustments that make data useful (or more useful) for economic analyses. In addition, some laws and regulatory bodies require certain analyses to be completed in accordance with specific accounting rules and guidelines.
 
Many of NERA's economists are also Certified Public Accountants, with training and experience in analyzing financial statements and financial data prepared in accordance with Generally Accepted Accounting Principles (GAAP) and other accounting standards, including International Financial Reporting Standards. NERA's accounting experts combine statistical and econometric expertise with an in-depth understanding of the nature and possible flaws in the underlying financial data. We are frequently asked to provide consulting or expert testimony. Our experts have extensive experience with the standard-setting process for GAAP and determining which components of GAAP apply in ambiguous circumstances. Further, our experts can recognize situations where GAAP is unclear, and can articulate and explain different allowable accounting treatments.

NERA's accounting experts are also uniquely positioned to evaluate the economic substance behind reported financial results while being aware of the actual numerous transactions that underlie the numbers. NERA has applied this specialized knowledge in numerous engagements involving accounting issues including:

• Analyzing the value of securities tied to subprime lending, including reserves for losses on the balance sheet of the originator.
• Examining allegations of accounting fraud in securities class actions.
• Evaluating economically complex transactions or entities.
• Determining the economic effect of practices such as options backdating.
• Analyzing the economics of mutual funds, and data in cases of alleged mutual fund fraud.
• Examining the economic effect of accounting assumptions and estimates.

Depending on the nature of the case and their assignment, our accounting experts can work in concert with our economists, relying on some of the same analyses as our damages experts, or they may be set up to work separately in order to insulate their work.