Amanda Fyffe 21 Dec 2016 03:53pm

Diary of a forensic accountant: Part 4

Across all disciplines of forensic accountancy there is no such thing as a typical day – the proverbial "to-do list" is more like a Japanese kaiten-zushi restaurant: as one task is ticked off another quickly fills its place. Although this may seem like a never-ending merry-go-round, after nearly 20 years, this is the main reason I still do what I do

Caption: Amanda Fyffe describes the ins and outs of personal injury and fatal accident claims.

I am sure most forensic accountants would agree that it certainly makes for an interesting working day. The diversity in the work is immeasurable: there aren’t many jobs where you are able to examine, research and learn about so many different types of business in terms of size, industry and function on a daily basis. The opportunity to continually develop your skills is also ever-present as is the need to be responsive and flexible – all the necessary ingredients for a dynamic career.

So it is probably clear that I am passionate about my job and the work that I do, but what is my area of specialism and what are the key elements?

My focus at RGL is personal injury and fatal accident claims (PI/FA) – or "people claims" as I like to call them – and so my work is almost exclusively within the litigation arena where I fulfil the role of an independent expert witness typically instructed by lawyers. As a result, unlike many of my colleagues who you might have read about in other parts of this series, during my day-to-day work it is rare for me to be travelling around the world or, indeed, around the country.

The injury or death can be due to a variety of reasons, including medical negligence, occupational disease or accident (whether a motor accident, an accident at work or occurring while travelling overseas). However, for me, the cause of injury or death is largely academic.

Read more from our diary of a forensic accountant series

My focus is on how the claimant/deceased generated their earnings and determining what they would have earned if the incident had not happened – in other words, to calculate the loss of earnings, or the loss of dependency on those earnings for FA claims. To do this you really have to get to grips with, and understand, what the individual did for a living and, if they were running their own business, to understand how that business operated from both an internal and external perspective.

I could be looking at a small sole trader business or a multimillion-pound global company, but ultimately my initial aim is relatively straightforward and consistent: to establish how the business functioned and generated profits, while taking into consideration the parameters of that business in terms of capacity, staffing and resources.

However, it is also vital to consider economic and industry factors as well as personal circumstances such as pre-existing medical conditions, retirement plans or the involvement of family members. But whatever avenue of analysis is undertaken, it must all be considered side-by-side when formulating a robust loss of earnings calculation.

One of the biggest challenges in PI/FA cases is when the claimant/deceased was on the cusp of developing or launching a new business. Without being able to gaze into a crystal ball, whether the new venture would have been realised will always be unknown, but we can draw on many resources, such as witness evidence and statistical data, to present a range of calculations reflecting the impact of key uncertainties and likely outcomes so that either a settlement can be reached or a judge can make their decision.

Read more from our diary of a forensic accountant series

Another challenging situation is the calculation of losses from defined contribution pension schemes – which I’m sure has made many forensic accountants wish for that crystal ball. While the reality is that nobody really knows what will happen in the future, it is the forensic accountant’s role to draw on all resources available – such as looking at historic performance and anticipated future economic activity, and consulting with actuaries, economists and pension providers – to present fair and reasoned calculations.

When preparing loss of earnings calculations, some elements do have a prescribed methodology as set in case law. Given this, it is essential to keep up-to-date with any relevant changes, albeit that things do not move particularly quickly. New precedents can take a while and it can take even longer to overturn a previous decision – earlier this year, the case of Knauer v Ministry of Justice changed a ruling initially made some 37 years ago.

Indeed, the courts play a fundamental role in the progression of PI/FA cases. As an expert witness, I am bound by court timetables and, regardless of who instructs me, my overriding duty is to the court. In fulfilling this role, I need to ensure that I have forensically examined all the information available to me. It is this neutrality and impartiality, in being duty-bound to the court, that appeals to me and I suspect - I know - why I enjoy and continue to specialise in this area of forensic accountancy work.

Amanda Fyffe is a director at RGL Forensics who has been involved in forensic accounting in London since 1997 focusing on the quantification of losses for personal injury/fatal accident claims