4Ed_CCH_Forensic_and_Investigative_Accounting_Solutions_10

4Ed_CCH_Forensic_and - 119 Chapter 10 Commercial Damages CHAPTER SUMMARY Overview When harm comes to one person or party who suffers an economic

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© 2009 CCH. All Rights Reserved. Chapter 10 119 Chapter 10 Commercial Damages CHAPTER SUMMARY Overview When harm comes to one person or party who suffers an economic loss as a result, there are f nancial considerations. If the loss is sustained from the harmful act of another, there may be damages. In a legal setting, the person harmed (plaintiff) and the person who harmed the plaintiff (defendant) may not agree as to the facts surrounding the harm and the damages. Often experts are called in to resolve the issues and present them in court. The forensic accountant role in such disputes can vary from case to case, but it is often concerned with the calculation of damages. Commercial damages may relate to either loss of pro f ts or the reduction in value of a business entity. In rare cases, there may be both lost pro f ts and reduction in business value. The Expert ¶10,001 Expert Witnesses’ Quali f cations Sources differ on what quali f cations are desirable for an expert witness in damages. Certainly, the expert should be trained and experienced in quantitative analysis. According to the Federal Judicial Center’s Reference Manual on Scienti f c Evidence, the method used and the substance of the damages claim dictate speci f c areas of specialization that experts need. The accountant who serves as expert witness will often be a CPA or hold a Ph.D. Often the accountant may also have an MBA degree, and a growing number of practitioners are seeking a forensic-type credential. ¶10,011 Expert Witnesses’ Testimony Requirements Daubert Factors. In the Daubert case, the U.S. Supreme Court characterized the Court’s function as that of a ‘‘gatekeeper’’ in determining whether an expert’s testimony constitutes ‘‘scienti f c knowledge’’ that will assist the trier of fact to understand or determine a fact in issue. A judge performs this function by ensuring that an expert’s testimony is relevant and reliable. The Supreme Court in Kuhmo Tire Co. extended the principles of Daubert applicable to scienti f c experts to all experts possessing ‘‘technical’’ or ‘‘other specialized’’ knowledge. Voir Dire Challenges. Voir dire (examination of witness’s competency) is another legal obstacle to expert testimony in a damages case. Usually the opposing attorney is questioning the expert’s skills, education, training, knowledge, and/or experience to be an expert witness. Basics of Damages Litigation ¶10,021 The Legal Framework of Damages In order to win an award for damages, the injured party must generally prove two points: (1) that the other party was liable for the damage, and (2) that the injured party suffered damages as the results of the actions or lack of actions of the offending party. This usually requires the proof of three issues by the legal team: proximate cause, reasonable certainty, and foreseeability. Generally, the harm that has been caused by the plaintiff can be either a breach of contract or a tort. This
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This note was uploaded on 01/12/2012 for the course ACCT 555 taught by Professor Briggs during the Spring '11 term at University of Texas at Dallas, Richardson.

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4Ed_CCH_Forensic_and - 119 Chapter 10 Commercial Damages CHAPTER SUMMARY Overview When harm comes to one person or party who suffers an economic

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