2024 AICPA & CIMA Forensic & Valuation Services Conference

This session will address the consideration of alternative causes of loss in evaluating lost profits damages. Specifically, it will incorporate relevant legal considerations and damages issues that may arise.

In 2022, major central banks embarked on one of the fastest rate hiking cycles in history in their attempt to control a surge in inflation. Inflation has been coming down rapidly in the U.S. and elsewhere, but has yet to reach the 2.0% central bank target. Market participants are now expecting the U.S. economy will achieve a soft landing, but are split on when will the Fed cut short-term policy rates to a more neutral level. Political uncertainty will also be high, as we approach U.S. Presidential elections. Depending on election promises, a significant increase in the U.S. debt load could place upward pressure on long-term interest rates. Join Carla Nunes and James Harrington (both in Kroll) as they deliver a global economic and financial market update and discuss the related impact on cost of capital assumptions and valuation analyses.

This session will explore various perspectives and uses for valuation of start up companies. Participants will overview the lifecycle of an early-stage business. Corresponding to each phase of a company’s development, the session will detail the valuation methodologies available as well as the key inputs and assumptions.

The session will focus on the evaluation of a targets solvency.  The session will discuss the three accepted methods, as well as alternatives and special considerations involved in the assessment.

This session will offer an overview of lost profits and other damages in trademark cases and a detailed case study.  The session will cover the basics of business valuation, setting the foundation for intellectual property (IP) valuations.  The case study focuses on the loss of phantom equity in a trademark case.

Accounting neutrals (sometimes described as “accounting arbitrators”) play a pivotal role in resolving post-closing M&A disputes via a form of extrajudicial alternative dispute resolution. Participants in this session will explore the different services and various issues that may be addressed by an accounting neutral — and be introduced to key “how to” considerations for a CPA who is appointed to this role. 

In this session, we will cover the following topics:

• Considerations for being engaged as an accounting neutral
• Common causes of M&A related disputes
• Addressing common non-accounting disputes (discovery issues, timeliness issues, etc.)
• The dispute resolution process
• Common pitfalls

One of the most common types of valuation is for IRC 409A or ASC 718 purposes, typically of common stock for option granting purposes. While there have been many presentations about the technical merits of preparing these valuations, the goal of this session is to present the reviewer's perspective at top public accounting firms. This can help you prepare and appreciate audit reviews and ensure your documentation facilitates the review process.

Shareholder dispute engagements entail both forensic and valuation components. This session will provide a foundation for basic knowledge, from both legal context and real case applications, so that FVS professionals can properly plan and perform the forensic and valuation analyses in which the cases entail.

As fraud schemes evolve and regulatory pressure intensifies, forensic professionals must stay ahead of the curve. Join forensic specialists Jonathan T. Marks, Howard Silverstone, and Fred Kohm as they dissect the most pressing fraud hot topics that have defined 2024. This session is designed to give attendees practical tools and insights to tackle these challenges head-on, safeguard their organizations, and navigate the shifting regulatory landscape.

Key Topics Covered:

• Rise in Financial Statement Fraud- Explore common fraud schemes (e.g., revenue recognition and expense understatement), examine case studies, and discover best practices for internal audits and controls to prevent these activities.
• Regulatory Actions and Penalties- Gain insights into these significant regulatory actions, learn the key components of an effective compliance program, and explore strategies to strengthen internal audits and governance practices to mitigate risks.
• Inadequate Internal Controls- Understand the most common internal control deficiencies, explore case studies of fraud due to inadequate controls, and discover practical steps to improve control environments, including automation and regular assessments.
• Global Regulatory Initiatives- Stay updated on the latest global regulatory requirements, learn how to manage cross-border risks, and understand the role of international cooperation in combatting financial crime.

This session will be a discussion with a seasoned trial attorney and financial experts who will share their insights, guidance and expertise about best practices and tactics on the working relationship between lawyers and experts. Learn how attorneys and experts can work together to prepare for any situation, from client engagement, report preparation/delivery, deposition and trial. Discuss what lawyers look for in working with financial experts, and understand what the court's view of the expert role is and how that may differ from the lawyers and client's viewpoint.

Karolina Calhoun and Kevin Segler will cover all things related party in divorce valuation, including entity structure issues, multilayering with discounts, and tracing marital versus separate asset ownership with complex multi-entity ownerships. We will also discuss related parties in the business and said impact on ownership, valuation, and division—including the consideration of classes of stock in division, such as GP versus LP or voting versus nonvoting.

Valuation advisors play a vital role throughout the lifecycle of an employee stock ownership plan (ESOP). During the formation process, valuation advisors work with a trustee team, including legal counsel, to develop an appraisal of the subject company, negotiate the terms of the transaction, and issue a fairness opinion. Once established, valuation advisors complete an annual appraisal to set the share price for plan administration and redemptions in the normal course of business. At each step of the lifecycle, valuation advisors are required to consider ESOP specific regulations promulgated by the U.S. Department of Labor, the fiduciary duty of the trustee, and the impact of a leveraged buyout on the future cash flows of the subject company. 

This session will discuss what valuation experts should expect and consider when evaluating ESOP Transactions such as:

• The role of valuation services at each step of the ESOP lifecycle.
• Common reasons for the dissolution of an ESOP and the implications for both sellers and buyers.
• The roles of each member of a “trustee team.”
• Common pitfalls or sticking points during the negotiation process.
• Common adjustments to consider when valuing ESOPs (e.g., officer’s compensation).

Forensic accountants are problem solvers by nature, so when presented with a case where the facts don’t add up, what should be done? We must think “outside the box”! There are several ways fraudulent activity occurs depending on the scenario. When it is not a straightforward financial statement fraud, it is imperative that we figure out alternative approaches to identify the fraud and quantify the related damages. Currently, a plethora of tools are available for us online to use in fraud investigations that typically one would not think of using for non-financial data analysis, such as mapping software or industry trends. Evaluating and analyzing non-financial data to get greater insights into the data is key. Applying data analytics to correlate this information with the accounting records enables us to determine the legitimacy of the related revenues and/or expenses. This may be a game changer and provide the edge that is needed to figure out the fraudulent activity.

Daubert challenges represent a pivotal aspect of the legal and expert witness landscape, shaping the admissibility of expert testimony in courts. In this presentation, we delve into the nuanced realm of Daubert challenges, drawing insights and lessons from recent cases involving expert exclusions. By examining recent case examples and distilling lessons learned, this presentation aims to demystify Daubert challenges and empower experts with the knowledge and strategies needed to navigate this complex terrain effectively.

This presentation will cover advanced techniques related to the valuation of private assets, specifically equity in private companies that are venture capital- or private equity-backed. It will describe several strategies to price illiquid assets when no recent observable transaction prices are available. 

Topics covered include the following:

• Business use cases for utilizing technology in the valuation of private assets
• Data strategy for pricing of private company valuations
• Using AI technology to enhance traditional methodologies to provide real-time private company valuations
• Overcoming current limitations to the use of AI
• Creating an audit trail
• Use of attribution of factors that influence the change in value
• Confidence intervals in AI-generated valuations