May 1: Deadline for Florida businesses to file annual reports with the state
May 15: Deadline for Exempt Organizations to file annual returns on Forms 990 or 990-EZ, or receive an automatic six-month extension to file by November 15
June 15: Due date for individuals and calendar-year corporations to make 2017 second-quarter estimated tax payments
June 15: Deadline for U.S. citizens or resident aliens living and working outside the U.S. and Puerto Rico, including members of the U.S. military, to file 2016 income tax returns (Form 1040 and 1040NR) or request a four-month filing extension to file by October 16. Applicable taxes were due on April 18.
July 31: Deadline for calendar-year Employee Benefit Plan sponsors to file Forms 5500, 5500-EZ or 5500-SF, Annual Return/Report of Employee Benefit Plan, or receive an automatic extension to file on November 15
July 31: Due date for businesses to file second-quarter 2017 payroll tax returns and federal unemployment tax
September 15: Due date for individuals and calendar-year corporations to make 2017 third-quarter estimated tax payments
September 15: Deadline for partnerships and S-Corporations, that in March had requested a six-month extension, to file their annual 2016 tax returns and provide shareholders with Schedule K-1s
September 15: Deadline for trusts and estates, that in April had requested a six-month extension, to file their annual 2016 tax returns
October 15: Deadline for individual taxpayers and corporations, who in April requested a six-month filing extension, to file their 2015 income tax returns
October 15: Extended deadline for calendar-year Employee Benefit Plan sponsors to file annual tax returns, if they took advantage of an automatic filing extension in July
October 15: Extended deadline for taxpayers with foreign financial accounts to file FinCEN Report 114
November 15: Extended deadline for exempt organizations to file 2016 tax returns, if they took advantage of an automatic filing extension in May
Attorneys involved in forensic investigations are well-versed in the finer points of gathering information and conducting interviews that can uncover the truth from the most reluctant and guarded sources. Careful preparation and planning goes a long way toward building trust and rapport with interviewees, recognizing their verbal and non-verbal clues and avoiding a broad field of legal landmines that can contaminate the entire interview process. Oftentimes, when investigations involve financial issues, for which fraudsters will go to great lengths to cover their tracks, attorneys should consider the benefits of engaging forensic accountants to collect, analyze and interpret complex physical and electronic data and conduct interviews with relevant parties to bring the truth to light.
Forensic accountants have the technical accounting and audit skills required to understand and unravel complex financial subjects. They are also uniquely proficient in the art and science of investigating the people involved in these matters. It is rare for an alleged criminal to simply confess his or her actions and the extent of the wrongdoing. Rather, a fraud investigation must include interviews with plaintiffs, defendants, expert witnesses and related parties to identify the non-financial facts of a case, including opportunity and motive as well as causation and damages. Gaining this insight requires forensic accountants, like attorneys, to have a broad understanding of the law, expert knowledge of financial facts of a particular case and a mastery of effective interview techniques.
Establish Rapport. During the investigation of a purported crime, it is not uncommon for the parties involved to view law enforcement, lawyers, judges and opposing parties as threats. The more intimidated peole feel, the more reluctant they will be to answer questions. Therefore, it is important that interviewers take steps to garner the trust of interview subjects and make them feel comfortable from the onset. Remember that an interview should be perceived as a conversation rather than an interrogation.
Establishing a rapport with witnesses can be as simple as offering them a drink before the interview and beginning the conversation with a basic overview of the examiner’s role, followed by simple, non-confrontational background questions that are easy for subjects to answer. As the interview proceeds, questions may become more targeted. Another method for interviewers to engage the willing cooperation of witnesses is to mirror the witnesses’ verbal and nonverbal behaviors and repeat their words or sentiments. This gives witnesses the perception that the interviewers “get” them. It puts subjects at ease and allows the interviewers to control the conversation and transition the interview to their line of questioning.
Be Objective. Establishing a connection with witnesses and avoiding any contamination of evidence also requires interviewers to demonstrate professionalism, empathy and objectivity while avoiding any hints of judgement, criticism or blame. This means that interviewers should choose their words carefully and pay attention to their own tone and nonverbal cues, as well as those communicated by witnesses. Open-ended questions should be phrased so that they are not accusatory and do not intimidate witnesses or reveal any facts the examiners may already know.
Listen and Observe Actively. Active listening requires interviewers to not only hear and understand the words witnesses speak, but to also recognize what witnesses do not say and what they communicate via nonverbal cues. Examiners must pay meticulous attention to a witness’ tone and syntax and his or her body language in order to establish a baseline of the interviewee’s behavioral patterns early in the interview process. Deviations from these norms may indicate that an examiner has “struck a nerve,” and should serve as a signal that they should change the line of questioning or dig deeper to identify if this inconsistency is a sign of deceit. While nervous laughs and uncomfortable pauses are not proof of deception in and of themselves, interviewers must be sensitive to reading changes in witnesses’ behaviors and leverage these opportunities to control the direction of the interview.
Be Flexible. Examiners must remember that the intent of the interview is to gain knowledge and gather new evidence through information provided by the interviewees. Therefore, they should be prepared to think quickly and deviate from a script of carefully prepared questions in order to allow an interviewee’s responses to lead the discussion toward the ultimate pursuit of facts. Some of the most productive interviews are those in which the interviewee does most of the talking.
Understand the People Behind the Numbers. There is no doubt that financial litigation often involves complex financial transactions. Sorting through layers upon layers of empirical data to connect seemingly invisible dots to trace funds and compute economic damages requires not only technical and analytical math proficiency, but also an understanding of the human condition. Financial statement misrepresentation, fraud and misappropriation of funds do not occur organically in a vacuum. Rather, they require the action of willing participant(s) who have a perceived pressure or motivation to commit these acts, the perceived opportunity to carry them out and a rationalization for their behavior. Forensic accountants are well trained in analyzing communications to identify evidence of these elements, which may be carefully concealed in a subject’s word choice, sentence structure and syntax.
Get Out of Your Own Way. Examiners can be a significant impediment to effective interviews when they fail to pay attention to their own words and behaviors. Interviewers should spend a considerable amount of preparation time deciding how to construct their questions, from the words they use to their tone and demeanor during questioning. There is a fine line between developing a professional rapport with an interview subject and stepping over a line that can contaminate the interview. Similarly, interviewers should be prepared to spend most of their time during the interview process listening, rather than talking, to avoid the risk of interfering in a subject’s testimony.
Forensic accountants can be a significant asset to attorneys representing clients in a wide range of litigation matters, including shareholder disputes, breaches of contracts, lost profits, hidden assets and other types of financial fraud. Their advanced knowledge of financial schemes, their ability to analyze significant amounts of complicated data and their understanding of the law are powerful tools that attorneys may leverage to gather pertinent evidence to support and defend claims.
The professionals with Berkowitz Pollack Brant’s Forensic Accounting and Litigation Support practice have extensive experience working with federal and state agencies, legal counsel and other parties on many high-profile fraud investigations. Their business acumen, technical forensic skills and expert testimony have proven critical in creating a trail of facts to support a wide range of complex legal matters.
About the Author: Richard A. Pollack, CPA/ABV/CFF/PFS, ASA, CBA, CFE, CAMS, CIRA, CVA, is director-in-charge of the Forensic and Business Valuation Services practice with Berkowitz Pollack Brant, where he has served as a litigation consultant, expert witness, court-appointed expert, forensic accountant and forensic investigator on a number of high-profile cases. He can be reached at the firm’s Miami office at 305-379-7000 or via email at firstname.lastname@example.org.