Forensic Accountants and Calculation of Value Reports

Recent Court Observations

James A. DiGabriele, PhD/DPS, CPA/ABV/CFF, and Peter L. Lohrey, PhD, CVA, CDBV

Litigation matters often require that the value of specific assets or business be determined. The standards by which such valuations are arrived at can be complicated and sometimes confusing. This article introduces the idea that a calculation of value report—which can rely on limited procedures in certain situations and unlimited procedures in others—meets the requirements of reliability and fitness under the Federal Rules of Evidence (Rule 702) and the “reliable and relevant” test under the Frye standard [Frye v. U.S., 293 F. 1013 (D.C. Cir. 1923)]. It is important to emphasize that the authors believe that this holds true so long as the forensic accountant is free to apply his own approaches and methods to determine a value or range of value.