Page 43 - Family Law Services

attorney can then either include in his or her formal requests for discovery or provide to opposing coun-
sel. The information on the list typically includes the following:

• Financial statements and tax returns for the last five years up through and including each valua-
tion date

• Other detailed financial data relating to the balance sheet and income statements

• Financial projections

• Corporate organizational and legal documents,

• Marketing data

• Information on key personnel and clients and customers

• Information relating to intellectual property and other intangible assets

Economic and industry data are usually gathered from publicly available resources, but the subject com-
pany may be a valuable resource for industry data and information about what is happening in its mar-
ketplace. Market research includes, but is not limited to, information on the company’s competitors,
management’s knowledge of transactions in the industry, guideline public companies, private company
transactions, and the cost of capital.

Once the information is received, a preliminary analysis of the financial and other data is made in prepa-
ration for a management interview and site visit. Prior to interviewing management or the owner spouse,
or both, it is advisable to interview the nonowner spouse because he or she may have information rele-
vant to your analysis. In some situations, when the CPA is engaged on behalf of the nonowner spouse, a
management interview may not be granted. In that situation, the CPA will have to work with the attor-
ney to prepare for depositions of the owner spouse and possibly other representatives of the company. It
is customary for the expert to provide a list of questions to be asked in the deposition and in some cases
to attend the deposition. The advantage of attending the deposition is twofold: First, the CPA is able to
listen to the answers and make an assessment of the witness’ testimony, and, second, the CPA can assist
the attorney with follow-up questions.

In addition to formal discovery, the CPA should also be aware of the parties’ answers to interrogatories.
Interrogatories can provide valuable information, but they are not as effective as discovery and deposi-
tions.

The Date of Valuation

The valuation date is determined by the law in the jurisdiction. In some states, the date of the valuation
is the date of trial. In others, it can be the date of separation of the parties or an alternative valuation date
chosen by the court. If the date of valuation is the date of trial, this creates a dilemma for the CPA. It is
impractical to expect to have current financial data on the subject company as of the date of trial. It is
typical to use the most recent financial data that has been made available through the discovery process
and use that as the valuation date. In some matters, the CPA may have to perform two or more valua-
tions, one on the date of separation or alternative valuation date and one on the date of trial. In cases in
which there are separate property claims, valuations may be needed at the date of marriage or date of

© 2020 Association of International Certified Professional Accountants 41