
Managing Director
FTI Consulting
Despite several high-profile COVID-19-related bankruptcies, financial markets are continuing their “bull” runs in 2021. However, some say the large number of transactions in 2021, coupled with a trend of overly optimistic company valuations, foreshadows the possibility for a large financial market reset later this year and beyond. This, in turn, could spark another increase in corporate bankruptcies.
Director
FTI Consulting
This responsibility rests on management’s approach to managing and executing the IPO program, setting the public company up for success and ensuring the necessary infrastructure (e.g., technical accounting, financial reporting and treasury support, etc.) is in place to manage business and financial statement reporting risks. These actions are not only good management practices but also can mitigate bankruptcy risk.
Senior Managing Director
FTI Consulting
Forensic accountants, many of whom are licensed certified public accountants or certified fraud examiners, are uniquely trained to review a bankrupt entity’s financial records and business transactions with an eye toward identifying anomalies. They can provide key insights that might guide or alter key decisions made by the board of directors, audit committees and other stakeholders (e.g., restructuring officers, ad-hoc investor committees, secured and unsecured creditor committees, and legal counsel). Serving as a trusted advisor to company management and the restructuring team, forensic accountants can add another layer of scrutiny during bankruptcy proceedings. They can contextualize a company’s corporate governance and internal controls, business records, bank statements, financial systems and subledgers. They also can identify irregularities (e.g., unusual or unexpected accounting journal entries made to improve a company’s asset base as presented in financial statements) that might otherwise seem insouciant or go unnoticed by management.
Any findings uncovered by the forensic accountant’s initial assessment can assist management and a company’s restructuring advisors in identifying the areas that will be best served by a forensic accountant’s investigative skill sets and scope, especially when essential staffing resources may be limited.
How Forensic Accountants Can Help