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Retaining Forensic SpecialistsThe MNP Forensic and Litigation Support Guidance SeriesMNP.ca

MNP LLP’s Forensic and Litigation Support team provides its clients with a comprehensive suite of reactiveand proactive services designed to address an array of situations faced by organizations and individuals.This publication is intended as a guide for organizations, legal counsel, or individuals who are consideringretaining a forensic accountant. It outlines the types of services provided and the situations where theymight be required. It also discusses the professional standards which guide our engagements.Selection of a service provider should be based on an assessment of the relevant person(s) qualifications,experience and skills in the context of the anticipated engagement and the unique circumstancessurrounding it.

Who might engage forensic and litigationsupport services?Any person or organization - for instance, an individual, corporate entity, law enforcement or government agency.Matters in which forensics and litigation support teams are retainedReactive EngagementsInvestigationsLitigation supportFamily law mattersWe conduct fact-finding investigations intofinancial irregularities, fraudulent activity, andcommercial negligence. Our findings help ourclients make informed and difficult decisionsabout wrongdoing, fraud and misconduct.Common areas of investigation are:We provide insight and analysis into anorganization’s business activities to answerfinancial concerns for the parties in litigation.This might be in the context of a shareholderdispute, commercial dispute or regulatorymatter. Our work commonly involves: Workplace investigations involvingemployees, managers and third parties; Identifying the extent and quantum ofpayments to specific parties;Dealing with financial issues following amarital breakdown is challenging. The issuescan be significant, but even relatively minormatters can be clouded by a lack of or toomuch information, not knowing whereto look for details, or what to do with theinformation once it has been collected. Regulatory and criminal investigations; Building and reviewing complex financialmodels quantifying economic damagessuch as loss of profits; Professional negligence and misconductinvestigations; Investigations into occupational andinvestment frauds such as Ponzi schemes.Triggers: Suspicions of fraud, employeemisconduct, regulatory issues and allegedcriminal activity, shareholder disputes,financial irregularities, allegations of bullying,harassment and other wrongdoing, cyberbreach, conflict of interest concerns, antimoney laundering (AML) issues, concerns ofunethical or irregular behaviour. Reviewing complex transactions andproviding simple, straightforwardexplanations; Analysing large volumes of records and dataand presenting it in a structured formatdesigned to assist the parties to the litigation.Triggers: Commercial disputes, shareholderdisputes, damage quantification, businessinterruption claims, asset identificationand tracing, Anton Piller orders and MarevaInjunctions, data analytics.We can help our clients and their legalcounsel navigate unfamiliar accountingterritory. To help resolve disagreements, ourteam provides advice, calculations and indepth reports to clarify the financial positionof the parties involved.Triggers: Divorce, estate disputes, guidelineincome, dissipation of assets, incomedetermination, division of assets, assetidentification and tracing.

Digital forensics investigationsInsurance mattersWe collect the electronic evidence that tells the story for you.MNP's Forensics and Litigation Support team will preserve,analyze and report on computer evidence to standards requiredfor criminal or civil proceedings. Our services include imagingof devices, reviewing and recovering deleted items andundertaking searches of digital files for items relevant for theinvestigation / litigation.Restoring a damaged property or business to its pre-eventcondition is a complex process. There are numerous factorsand scenarios to consider when determining the value of thedamage to the property or business. MNP’s Insurance Services isan independent voice recognized by insurers and insured alike.We draw on the knowledge of our nation-wide pool of teammembers experienced in a broad range of industries to helpquantify insurance claims and losses.Triggers: Allegations or concern about fraud, bribery, theftof intellectual property, or workplace misconduct such asharassment, computer misuse and unauthorized access tocomputer systems.In addition to assisting with insurance claims and losses, our teamprovides proactive services. We provide an independent reviewand use a proven maximum probable loss scenario modelingprocess to ensure appropriate insurance limits are in place.Triggers: Events which cause property losses and interruptionto business activities, natural disasters such as forest fire, flood,storms, drought, human-caused crisis such as explosions, arson,strikes, blockades, and fraud.Proactive EngagementsAnti money laundering (aml) complianceEnsure your organization meets and complies with Canadian anti-money laundering regulations and the requirements ofyour financial institution. To manage and reduce your compliance risk with domestic and international AML rules, we offerthe following: Compliance program developmentAML compliance effectiveness reviewTransaction monitoring and reportingOperational due diligenceLook-backs and remediationFraud risk managementMNP provides fraud risk reviews which assist in ensuring organizations are adequately protected. Services includethe comprehensive assessment of an organization’s fraud risks, review of controls to protect against the risk andrecommendations for improvements to further limit the risk of fraud.Whistleblower hotline serviceMNP’s Ethics Alert Hotline service helps protect your business and reputation by fostering integrity. The service providesa secure, anonymous and easy-to-use channel for employees and other stakeholders to report incidents of unethical orirregular activity and to express their concerns or suggestions for improvement.It also increases the likelihood of early detection of issues and offers more time to effectively manage threats, mitigatedamages and defer future events. Our service includes: The implementation of a telephone hotline, web portal and text / email / fax service which allow anonymousreporting of concerns;24/7, 365-day monitoring;Awareness training;Customized reporting to designated persons in an organization including threat assessments and response planning.Insurance Policy ReviewMNP provides insurance policy review, coverage wording review and insurance values quantification in order to ensure yourcoverage matches your environment, risks, and needs.

Roles of an integrated forensicand litigation support teamWhen working with clients and their legal counsel, the typical role of a forensic and litigationsupport team is that of independent experts. The team ultimately has a duty to the court toobjectively gather and present facts which are intended to provide clarity to the matter sothat informed decisions can be made.In other situations, the role of a forensic and litigation support team might be as consultantsengaged to provide advice and analysis to guide aspects of a litigation. Acting in this role maypreclude the team from acting as a testifying expert in the same matter, i.e. as independentexperts.Finally, the role a forensic and litigation support team might play in a non-litigationenvironment can be: To assist in ensuring compliance with regulatory standards; orAssisting in designing and implementing fraud risk management plans.MNP’s integrated team adds a wealth of expertise in investigative and forensic accounting,litigation support, wrongdoing investigations, digital forensics and regulatory matters. Ourteam includes forensic accountants and fraud examiners, former law enforcement officers,anti-money laundering specialists and digital forensics specialists. We provide layeredexpertise and a balanced approach that recognizes each engagement has unique features tobe considered in the context of the law and other regulations and agreements.

Defining the assignmentEach engagement is planned for individual clients and their unique situation(s). We take a phased, agileapproach to ensure all points covered remain relevant and are communicated in a timely manner. This providessome certainty to clients during what can be a stressful time and enables them to make informed decisions asthe engagement progresses.To properly and efficiently structure the engagement, an engagement agreement, typically in the form of aletter, should be put in place. The engagement agreement should cover key aspects of the engagement as wellas allowing flexibility for the inherent uncertainty commonly associated with forensic and litigation supportengagements.When considering the engagement letter, attention must be paid to who, or how, forensic and litigationsupport services teams are to be retained as this impacts the form of the engagement agreement and the legalprotections provided by it. Forensic and litigation support teams might be engaged as follows: Directly by the client; Though legal counsel to help maintain privilege; Jointly retained by the parties to a matter or by the parties’ legal counsel; Directly retained by the court.Once the person / parties retaining the forensic and litigation support team are determined, common areascontained in the engagement agreement are as follows: Identifying of the client, and general issues at hand, i.e. the purpose of the engagement. The context isimportant for all parties to understand since a forensic report is prepared for a specific purpose and intendedaudience and generally cannot be used for other purposes; Identifying the parties to the engagement, including those who might be in an opposing or adverse position; The scope of work of the engagement, allowing for the inherent uncertainties of the engagement. This mightinclude documents to be reviewed and procedures to be undertaken; The anticipated deliverables and how those deliverables are intended for use, for instance submission to lawenforcement agencies, expert witness purposes, or internal purposes only; and The anticipated fees for the engagement, or fees for the first phase of the engagement.Other matters, not necessarily included in the engagement agreement, might include any scope limitations, thetiming of completion of the deliverables and the dates of filing of deliverables, examinations for discovery, trialdate and other timings.Where a forensic and litigation support team is engaged to undertake an investigation or provide expertwitness evidence, all aspects of the team’s activities must be unbiased, and the team has a responsibility tonot advocate for any party. Where expert witness evidence is anticipated / required, a forensic and litigationsupport team has a duty to the court irrespective of who is responsible for paying the team’s fees.

The EngagementProcessWhile recognizing that each situation is unique, the following represents phases of a typical forensic and litigation support engagement. Theextent of analysis, availability of documentation and the timing of deliverables can impact the engagement process and the extent and / ortiming of the various phases.Planning and information acquisition Initial meetings with client and client’s professional advisors tounderstand the matter at hand; Identify documentation and other sources of information; Obtain understanding of relevant systems and processes; Develop work plan for the engagement and agree on reportingformat and frequency of reporting; The purpose of this phase is to review the informationpresented to evaluate the situation and discuss expectationsand possible outcomes.Analysis / Investigation Initiate lines of investigations and / or analysis; Undertake interviews and gather documentation relevant tothe investigation and / or analysis; Confirm approach to analysis and specific techniques andconsider alternative theories; Undertake analysis and document observations and findings; Presentation and discussion of preliminary findings.Verification of findings and reporting Develop draft report for review, discussion and validation withclient and / or professional advisors. Depending on the natureof the agreement, this might include investigation findings,quantification of damages or recommendation to improveanti-fraud controls; Develop and present final report; As applicable, assist with queries on report from third partiessuch as insurers or law enforcement; As applicable, prepare and give expert testimony.1The Standard Practices for Investigative and Forensic Accounting Engagements are discussed below.The engagement process is designed to recognize that, although areview might start with one concern, others might be raised as theintegrated forensics and litigation support services team examinesthe evidence. For example, MNP was asked to look over severalyears of business expenses as part of a dispute. During the review,one of our team members noticed a discrepancy among one of theemployee’s payments; rather than being paid 26 times during aspecific period like the other employees, they were paid 30 times. Thisled to a separate line of investigation.DeliverablesOur deliverables depend on what is right for the situation andeach situation is unique.The phased approach described above enables us to deliver timelyprogress updates that empower the client to decide whether toproceed.Should the decision be to proceed, MNP would, as necessary, provide: Clear, comprehensive reports together with detailed supportingand organised documents Expert testimonyThe contents of a report commonly include the following and whererequired, are consistent with the requirements of the StandardPractices for Investigative and Forensic Accounting Engagements:1These standards require the report to include a clear statement ofthe engagement objectives, the information relied upon and anylimitations thereto, appropriate detail explaining the analysis andconclusions reached, the purpose to which the report can be used andany related limitations and a statement confirming independence.

Professional Standards andRegulatory RequirementsThis section considers professional standards and regulatory requirements to which a forensic and litigation support team might be subject.CPA Rules of Professional ConductAs members of a forensic and litigation support team are commonlychartered professional accountants (CPA), a forensic and litigationsupport engagement will likely be subject to the rules set out in theCPA Rules of Professional Conduct. Many of the rules are relevant toforensic and litigation support engagements, however two specific rulesrelating to independence and conflict of interest can impact whether aforensic and litigation support team is able to accept an engagement.Generally, where a party to an action is a current or former client of theorganization to which the forensic and litigation support team belong,there are restrictions as to the type of work that may be performed.CPA Canada and AICPA Forensic StandardsCPA Canada and the American Institute of CPAs (AICPA) haveset practice standards that should be met by all CPAs in Canadaconducting a forensic assignment. These standards are in additionto those set out in the rules of professional conduct and any otherregulatory and legal requirements that may be applicable. Thesestandards are applicable to engagements involving a CPA that: Require the application of professional accounting skills,investigative skills and an investigative mindset; andInvolve disputes or anticipated disputes, or where there are risks,concerns or allegations of fraud or other illegal or unethical conduct.Where an engagement is anticipated that involves a CPA in Canada,the CPA should confirm the applicability of Forensic standards andthe requirements associated with them.Rules of CourtWhere a forensic and litigation support team is engaged to act as anindependent expert in a civil litigation, the engagement is subject tothe rules of court in the relevant jurisdiction.Each province and territory has their own set of rules pertainingto items such as the appointment of experts and the contents ofexpert reports. There are some variances in the rules, for example, theProvince of British Columbia and the Province of Ontario require anexpert append to their report a certification acknowledging their dutyto the court; other provinces only require acknowledgment of theirobligations to the court.What is consistent across all jurisdictions in Canada is that theforensic and litigation support team ultimately has a duty to assistthe court and remain independent.

MNP Forensic and Litigation Support ServicesRetaining forensic and litigation support services involves a number of key decisions. We hope this publication provides useful guidance andwill contribute to efficient engagements.MNP’s Forensic and Litigation Support team has extensive experience working with clients in a wide range of matters across diverseindustries. Please contact our specialists at MNP.ca to discuss your specific needs and how we can assist you, your clients or your business.MNP.ca5373-21

anti-money laundering specialists and digital forensics specialists. We provide layered expertise and a balanced approach that recognizes each engagement has unique features to be considered in the context of the law and other regulations and agreements. Roles of an integrated forensic and litigation support team