Why CPA & Credibility Matters
In Texas, only a CPA can be called an “Accountant” (TXSBPA Act 1990). That matters—especially in litigation.
Why?
Credibility is imperative. Some firms present junior associates of large accounting firms as forensic experts, even without accounting credentials. When the stakes are high, Federal Rule of Evidence 702 and GAAP standards create a strong argument: attesting to financials and expressing an opinion is the sole domain of a CPA. A CPA is a fiduciary not only to the client but to the Federal IRC and state governing laws and regulations. When we attest to our work in a public forum, we are representing the client and attorney in a court of law – we are accountable and credible.
We cannot rely solely on the credentials that the CPA designation brings—just as we cannot rely on experience alone. CPAs can incorporate the work of others, but only after following required standards and methods. In contrast, a non-CPA “expert” is not held to those standards and lacks accountability. For this reason, a CPA would not willingly release their work to be used by someone without the same credentials and experience.
What’s Next?
The new ASB released this year states that most work is now attestation work due to the rising level of complexity and the knowledge and accountability needed to attest to the work. The trend of paying less for a junior associate is slowly decreasing. The trend produces poor accounting work, more cost for the client, longer wait for the attorney and client.
The Death of a Trend:
A short true story.
I was hired to value a company, or as it turned out companies. All the ingredients for an arduous dispute existed. Criminal activity, large estate, divorce and an opposing counsel that wanted to do the client a favor and save a few dollars.
The result:
Proper analysis up front, that gave the attorney a leading edge proved to be paramount and highly effective. Simultaneously, I dug through years of “piercing the corporate veil”, money laundering, cash tracing, source of funds identification. All while police reports kept rolling in on criminal activity and cash layered with checks passed through well-known banks like Halloween candy passes from basket to basket.
A well-known high dollar accounting firm sends in Victor the Valuation expert that all the Judges know. Our attorney asks Victor the Valuation expert what qualifies him as an expert – “A master’s in finance”, and experience in the court room. The Judge decides that conflicts with Texas law and Federal Rules of procedure. I knew what that meant, Victor found out that day.
I did not take the stand or release reports for evidence. The attorney was well prepared. Consulting and educating got to the bottom of the issue and quickly; the outcome was ruled in our client’s favor. There were of course more twists and turns along the way, not chronicled in this short story.
The Point: Not every forensic accountant needs to take the stand for the client and the attorney to win. We can serve in different avenues as experts and the outcome be victorious.
Bottom line:Credibility isn’t optional. It’s foundational. The flexible mind is the intelligent mind.
Discuss Your Matter
Financial disputes often involve incomplete records, hidden assets, ownership questions, or source of funds issues that require deeper analysis.
If you’re an attorney or client facing a complex financial matter, Dawn Murrill, CPA, CFF can help provide clarity and defensible financial analysis.
