Page 69 - M & A Disputes

For engagements in which the practitioner is being retained to serve as a neutral accountant to adjudicate
posttransaction-related accounting disputes between a buyer and seller, the practitioner should carefully
consider the types of specific engagement risks associated with accepting and performing the services
required under this type of assignment. The practitioner should also consider their ability to render these
services in conformity with the requisite professional standards governing such services, as promulgated
by the AICPA and the ordinary standards of due professional care. Assignments involving the analysis,
interpretation, and judgment of particular areas of generally accepted accounting principles (GAAP) are
technical in nature and markedly different in scope than engagements traditionally undertaken by practi-
tioners. In addition, it is prudent for the practitioner to consider consultation with appropriate risk man-
agement personnel and others within his or her respective organization, such as in-house legal counsel.
Such consultation will allow the practitioner to determine whether the rendering of neutral practitioner
services are covered services under any existing professional liability insurance policies and whether the
applicable insurance carriers require notification that such services will be undertaken by the practition-
er.

Commitment to Neutrality

Assignments in which the practitioner functions as a neutral practitioner require professional objectivity.
Such assignments also require a commitment by the practitioner to adhere to the fundamental standards
and tenets of professional neutrality. By virtue of the fact that the parties have sought out and are con-
sidering the retention of the practitioner to resolve pending posttransaction-related disputes, the highest
regard should be given for unbiased analysis and investigation, both in fact and appearance. Professional
objectivity is important to all services provided by the practitioner. In addition, engagements in which
the practitioner serves as a neutral accountant compel an adherence to protocols and processes that en-
sure neutrality will be observed.

An important component to ensuring an environment of professional neutrality, both in the engagement
acceptance phase of the neutral arbitration project and the execution of the assignment, is the prohibition
of ex parte communications between the representatives of either party and the neutral practitioner. This
prohibition should extend to both oral and written communications. Ex parte communications between
either party to the arbitration proceeding and the neutral practitioner may give the appearance of im-
proper influence being exerted by the communicating party or bias on the part of the neutral practitioner.
If, in fact, either party attempts to exert improper influence on the neutral practitioner, the assignment
may need to be declined if the project has not yet begun, or the assignment may need to be halted, as-
signed to another practitioner within the practitioner’s organization, or referred to another practitioner
outside the practitioner’s organization.

A limited exception to this practice may be in situations in which the neutral practitioner is communi-
cating with either party in an ex parte fashion with items or subject matter of a purely ministerial nature,
such as the logistical arrangements associated with the delivery of documents, billing and collection ar-
rangements, and other similar matters. In consideration of the need to balance communications of an
administrative nature with the barring of all ex parte discussions to avoid the appearance of improper in-
fluence, the practitioner may consider the assignment of other professional or administrative personnel
on the project. Those personnel can communicate with either party on an as-needed basis in an ex parte
fashion to deal with items involving engagement administration and logistics.

The practitioner should note that ex parte discussions of a significant or serious nature may be grounds
upon which the other party to the dispute could successfully challenge to overturn decisions. To avoid
any potential ex parte discussions from occurring, many neutrals prefer that all communications take
place via e-mail, with both parties copied on all correspondence.

© 2020 Association of International Certified Professional Accountants 67