Forensic accountants and business valuators Rod Moe and Heather Moe discuss the evolution of forensic accounting in family law matters with Family Lawyer Magazine’s Editorial Director.
Hosted by: Diana Shepherd, Family Lawyer Magazine’s Editorial Director
Guest Speaker: Rod Moe and Heather Moe, Florida forensic accountants and business valuators
My name’s Diana Shepherd and I’m the Editorial Director of Family Lawyer Magazine. My guests today are Florida forensic accountants and business valuators Rod Moe and Heather Moe, who are here to discuss the evolution of forensic accounting in family law matters. Rod has over 45 years of experience in tax and accounting. He provides consultation services related to legal matters and often serves as an expert witness. Heather has been a licensed CPA since 2008. She frequently provides expert witness testimony in court, she’s also accredited in business valuations. Welcome, Rod and Heather! I’m so glad that you were able to join us today!
Rod: Thank you.
Heather: Thank you for having us.
Rod, you’ve been at this for some time now. Could you discuss the changes you’ve seen over the last 10 years – perhaps particularly over the last two years – in terms of dealing with family lawyers, clients, and the courts?
Rod: One big change is tracking documents. When we first began this, we spent a lot of time with paper files; now we maintain our documents in the cloud, and we are able to access our documents from wherever we are and email them to whoever needs to receive them. Most recently with COVID, videoconferencing technologies – like Zoom – is both important and efficient. For example, I’m currently at my vacation home in North Carolina, and I have a divorce case in San Francisco, California. I’ve never met the client, the attorneys, or the judge in person. But through Zoom, I’m able to testify and share documents on the screen. I know not all courts use videoconferencing technology yet, but it is very, very efficient.
Heather, what are your general observations about how forensic accounting has evolved over the last 10 years?
Heather: I have seen an uptick and demand for our services. They have grown exponentially. I think for several reasons people are either getting married later in life and have a key asset that they’re bringing into the marriage, or they’ve inherited money from family that requires an analysis of premarital components of these assets, or even a piece of property that was purchased in determining what portion of that property would be non-marital versus the marital component. I’m also seeing stock options are a more common form of compensation these days, rather than your traditional bonus payout.
Accounting for those and identifying those assets is something that has changed over the years that I hadn’t seen necessarily 10 years ago. And also, the shift in investment in the virtual world, cryptocurrency NFTs, non-fungible tokens as well as virtual wallets. A lot of people are dabbling in the virtual world and investing in those assets that need to be identified and businesses are also accepting cryptocurrency as a form of payment. It’s changed the shape of our world and is bringing a higher demand for our services.
Just a quick follow-up to that, Heather. Have you seen that cryptocurrency is becoming bigger and bigger in the divorce world – perhaps if someone is trying to hide assets from their spouse?
Heather: Cryptocurrency doesn’t make it into a traditional brick-and-mortar bank account. If someone is able to receive payment in that form or send money to a virtual wallet to purchase cryptocurrency, that can be a strategy to try to hide assets. I’ve definitely seen an uptick in that type of activity between spouses.
Rod, could you talk about business valuation and how the models for valuing businesses have changed – particularly over the last two years due to COVID?
Rod: Basically, there are three types of methods for doing business valuations: the income approach, the asset approach (the value of the assets that are held within the business), and the market approach (which looks at other businesses that are similar, that have been sold and trying to determine what the current business should sell for). In all of these cases, there’s no one model that fits all. To properly complete these valuations, you need to be able to understand what drives the value of the business. A lot of historical information about the business may not be that applicable now, but you must understand what drives the value of the business and what the current income stream is. The best way to look at things is very carefully – regardless of whether your client is the business owner or not – to determine what future income the parties will receive from this and the ability to pay alimony and child support. You have to keep your eyes on the situation and convey your knowledge of business valuations to the lawyers, the judge, and the parties.
Heather, how do you deal with unpredictability given the challenging times we’ve been facing when conducting a lifestyle analysis? One day it’s COVID, the next its war in Ukraine destabilizing the markets and economies. How do you keep up?
Heather: It’s definitely challenging times and trying to reflect a true picture of one’s lifestyle is constantly evolving. In recent cases for which I have completed lifestyle analyses, I’ve utilized the time period prior to the pandemic to truly reflect how somebody lived. I mean, we know the last two years have been quite difficult for individuals. Vacations, eating out – things were a bit uncertain there and our spending habits definitely changed. Looking back and analyzing the period prior to the pandemic, and then, of course, consulting with the client and reflecting how they’re currently living, their lifestyle, to ensure that everything’s accounted for properly.
Where do you see the practice of forensic accounting and business valuation going in the future? What changes, challenges, and opportunities do you think we’ll see over the next decade?
Rod: As Heather mentioned previously, I expect that the demand for forensic accounting services is going to increase as the complexity of assets that people invest in increases. Lawyers and clients are going to be relying upon forensic accountants to not only make financial calculations but also to be able to prepare exhibits and explain those financial and tax issues in a way that’s understandable. It will just get more and more technical as we go along.
How about you Heather? Same question.
Heather: I agree. The changes I see are the technology aspect of it, such as virtual meetings and hearings. Those are going to continue in the future. Short hearings are just more efficient to attend virtually, which makes it possible for us to take cases that are in other areas of the country and assist with those divorce cases. That’s going to be a constant in our world as we move forward.
Heather, have you had to deal with cases that involve some kind of cryptocurrency or NFTs? How did that go?
Heather: Recently, the majority of my cases have had some sort of cryptocurrency aspect to them. As far as the documentation – surprise, surprise – it was not initially disclosed. We’ve had to subpoena records identifying the main account – Coinbase, for example – and there’s a wallet component where the cryptocurrency is traded. Both of those accounts need to be disclosed and produced in order to determine what cryptocurrency the other party has. It’s a little complicated to identify those cryptocurrencies, but it’s something that we have experience in and can definitely help to identify the virtual assets the parties have. I’m sure a lot of clients are looking to make quick money, and the cryptocurrency world is definitely something that a lot of people are interested in and putting money into and trading.
Thank you, Rod and Heather, for taking the time to share your knowledge with our listeners.
Rod: You’re quite welcome.
Heather: Thank you for having us.
My guests today have been Rod and Heather Moe, certified forensic CPAs and accredited business valuators who have worked with many divorce and family lawyers across the United States. From their Lake Worth office, they serve clients in South Florida, particularly in Dade, Broward, Palm Beach, Martin, and St. Lucie Counties. To learn more about how they can assist family lawyers with complex valuation and forensic accounting cases please visit www.rodmoecpa.com.
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