The role of a forensic accountants in Alternative Dispute Resolution (ADR)

Some forensic accountants choose to specialise in Alternative Dispute Resolution (ADR) due to their familiarity with both finances and the legal system. Business litigation can be a very expensive and costly. Generally, opposing attorneys will fight vigorously for their clients. When forensic accountants are engaged as EXPERT WITNESSES in business litigation, such fighting can drive up the cost of the expert witnesses and drive down the understanding of the forensic accountant’s work and, therefore, the client’s satisfaction with the forensic accountant. In a typical business litigation scenario, the opposing attorneys may fight against providing information which the forensic accountant has requested in order to calculate damages or to perform a business valuation. Depending on the amount of rancor between the parties and level of antagonistic determination between the attorneys. There are times he may have to perform the damage calculation or business valuation without all the relevant information he believes is necessary. In the absence of such information, the forensic accountant may have to make reasonable assumptions regarding the missing information. If there are differing assumptions by each side’s expert witness, significant differences in damage calculation or business valuation amounts may result. In such situations, the parties often may expend significant time and incur significant costs in using these forensic accounting experts. Especially when there are significant differences of opinion between the two expert witnesses, the experts’ fees and attorney fees can be even higher. Both parties also may come away with confusion and misunderstanding regarding how the relevant damage amount or business’s value was determined. This is because they may only speak with the expert retained by their...

What is Alternative Dispute Resolution (ADR), Modes and Processes of Alternative Dispute Resolution (ADR).

Dispute resolution is the process of resolving a dispute between parties. Dispute resolution is also often referred to as “conflict resolution.” There are a number of processes that can be used to resolve conflicts, claims, and disputes. Therefore, ADR is the procedure for settling disputes without litigation, such as arbitration, mediation, or negotiation. It is also called external dispute resolution (EDR). ADR procedures are usually less costly and more expeditious. They are increasingly being utilized in disputes that would otherwise result in litigation, including high-profile labour disputes, divorce actions, and personal injury claims. One of the primary reasons parties may prefer ADR proceedings is that, unlike adversarial litigation, ADR procedures are often collaborative and allow the parties to understand each other’s positions. ADR also allows the parties to come up with more creative solutions that a court may not be legally allowed to impose. So the philosophy behind ADR is that it offers the parties an opportunity to avoid risks and reduces the likelihood of an unfavorable outcome. It gives the parties in the dispute the opportunity to consider the risks involved in litigation. Dispute Resolution Processes Generally, however, most dispute resolution processes are classified as facilitative, advisory or determinative or as ‘mixed’ or ‘blended’, and this article focuses on the more facilitative forms: (a) Facilitative processes involve a third party, usually with no advisory or determinative role, providing assistance in managing the process of dispute resolution. These processes include mediation and facilitation. (b) Advisory processes involve a third party who investigates the dispute and provides advice on the facts and possible outcomes. These procedures include investigation, case appraisal...

Game theory as a theoretical foundation of alternative dispute resolution

The mathematical theory of games was invented by John von Neumann and Oskar Morgenstern (1944). ‘Game theory is the science of rational decision making in interactive situations’ (Dixit & Skeath, 1999). ‘Game theory can be defined as the study of mathematical models of conflict and cooperation between intelligent rational-decision makers.’(Myerson,1991).   Both these definitions focus on the interactive component between the parties. At the heart there are the twin issues of conflict and cooperation. There is the assumption that these decision makers are rational and have specific objectives in mind which in a dispute is to reach a settlement. Game theory, a mathematical model used in a variety of dispute contexts starts with the premise that the participants, while not knowing fully the position of the other party, are rational and want to achieve the best possible outcomes.  Levine (2019) stated despite the intensity of a dispute, both sides ultimately want to achieve the best possible outcome. Each party has to assume that the other party is rational even though he may not know exactly what the other party wants. It is in this situation that the third party negotiator’s role becomes increasingly important to help move the parties along in the process of information exchange until they come closer to a common understanding as to what the other person wants. Game theory provides a new language to think of human behaviour and of parties who are in conflict. Negotiation can be used in the family setting to alter the expectations and preferences of the parties. In game theory, one of the dominant models which has been used to...
INTRODUCTION TO ALTERNATIVE DISPUTE RESOLUTION (ADR).

INTRODUCTION TO ALTERNATIVE DISPUTE RESOLUTION (ADR).

ADR meaning “alternative” to formal court hearings, trials and formal legal proceedings. In fact, many forms of dispute resolution are thousands of years old, dating from Confucian principles of promoting harmony and community, rather than individual, “justice,” in China and then later other Asian countries, or African community dispute resolution processes called “moots” (or in some countries Ubuntuor gacaca), which are mediation like processes in which community elders listen to narratives of the dispute from the parties and either help negotiate a solution with the parties, or, more like arbitration, decide or command some remedy, with the goal of preserving community peace. The goals of such older forms of dispute resolution are to prevent further conflict and escalation of the dispute beyond the parties, to restore the community to peaceful existence. In the West (Continental Europe and in England), the middle ages saw the movement from “trial by ordeal” (putting disputing parties on a horse to joust, or dropping them into a fire or body of water to see if God would “protect” them and declare the innocent or non-wrongdoer) to trial by evidence. The development of formal rules of evidence was designed to use rational forms of proof and judgement by “peers” (juries) about what had happened to cause the dispute. “Modern” justice meant that judges or juries declared winners and losers (in both civil and criminal cases) so that the guilty would be punished or pay damages and the innocent would be vindicated by using the same rules of procedure and substantive rules of law to everyone (“equal justice under law”). In the late 20th century this...

Bank Reconciliation Statement

What is Bank Reconciliation Bank Reconciliation Statement s the verification of all the entries in the bank statement with the bank book of the business. First, let understand what bank statement and cash book mean. A bank statement is the financial statement showing the details of all the transactions that the business had made through the bank account. While cash book is subsidiary book in which all cash transactions of receipts and payments are recorded. Definition of Terms Bank charges: This is money deducted from the entity account by the Bank to cover the cost of looking after the account. Unpresented cheque: Is a cheque draw but not yet been presented at the drawer’s bank. Uncleared cheque/ effect: Are bank cheque that passed through the clearing system but not yet cleared. It appears on the debit side of the cash book. Dividend: This is direct dividend receive into bank account. Standing order: This is an order given to the bank to pay a fixed sum of money at regular intervals from one’s bank account to a designated payee. e.g. paying rent, paying utility bill etc. Advantage of standing order It helps to save the repeated drawing cheque;They help to save spending money on stationery and postage andit is certain that payments are made on the due date. Disadvantages of standing order There are bank charges for such services. Dishonoured Cheque: This is cheque rejected by Bank.  Top 11 of what will give rise to dishonoured cheque When cheques are not signed or signed incorrectly (i.e. Irregular Signature)No date shown on the chequeWhen the cheque is mutilatedInsufficient funds in the...
PAY-AS-YOU-EARN AND PAYSLIP

PAY-AS-YOU-EARN AND PAYSLIP

PAY-AS-YOU-EARN Pay-as-you-earn is a tax deducted from employee salary account and remitted on or before the 10th day of the month following the month in which salaries were paid. See relevant sections of the Personal Income Tax Act (PITA). (S.81 of Personal Income Tax Act Cap P8 LFN 2011). S. for details WHAT IS TAXABLE ENTITLEMENT (GROSS) OR GROSS EMOLUMENTS This is the total amount your employer pay to you as salary including all benefits arising from employment. It can be a inform of wages, salaries, allowances including benefits in kind, gratuities, superannuation and any other incomes derived solely by reason of employment. All manner of allowance you earn, provided it’s not a re-imbursement of expense to you, is taxable.  Finance Act 2020, defined “gross income” as income from all sources less non-taxable income, tax-exempt items listed in Paragraph (2) of the Sixth Schedule and all allowable business expenses and capital allowance (finance-act-2020). This is addition to the Act. For example, if you spend an amount for training outside your station and the money is refunded or reimburse through your payslip, it must be subjected to tax. All pay not intended to be taxed must not be passed through payroll. Pay like training cost, transport to attend training etc. TAX RELIEF (TAX ALLOWANCE) This is amounts that can be deducted from a person’s annual income to reduce the amount on which tax is paid. Or the amount of your income which is exempt from tax aside from other statutory deductions. Consolidated relief allowance of N200, 000 or 1 per cent of gross salary or whichever is higher plus 20...
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