Place an order on custom essay, research paper on this or related subject
Responsibility taking is a very important aspect in business. Though the letter of engagement the contract is clearly spelt out to show the extent to which the contract will cover. Besides, the letter presumes to transfer some mandate in the management of the businesses’ affairs to a third party who would be an independent expert or an independent accountant in handling matters of accounting nature.
Legal redress in the Hoffman et al’s (2007, p 9) perspective is not only requires sufficient evidence but also relevant expertise. Some litigation may require that an expert in the area is sought to offer expertise advice and incidental evidence on the same. Unlike a consultant, the expert will only offer the requisite information that would be required towards the making of judgment by the court. The consultant on his part only gives information that is required to carry out an activity.
The independent expert normally receives relevant information from the parties in the litigation and reorganizes the information into meaningful and relevant pieces. Based on the gathered information coupled with the expertise he has, the expert makes communication to the parties he terms incidental for the information gathered. The independent expert ought to be a nonpartisan individual without any vested interest in the matter under litigation.
The independent as the term suggests implies that a person who is meant to only offer sufficient information on the matter under litigation any remain independently so even during the process of litigation. According to Federal Court of Australia (2008), the expert for example may be required to gather information on issues of human rights violate or otherwise and submit to the relevant government agency for a further follow up.
The expert will always study the national policies besides the identification of the areas of concerns and undertakes a thorough audit of the cited areas. Besides, the expert will take consideration of the registers within the area of concerns and undertake a thorough analysis of the registers for the purpose of using them in any litigation if the case does require such evidence. The regulatory framework, according to Justice Peter McClellan (2007, p 26) of the state is also an area of concern for the independent expert as most of the litigation may require the analysis of the policies that provide the guiding principles for the framework.
Investigative of forensic accounting is also incidental in the litigation process. In the event of such anticipation, an independent accountant would always be sought. The accountant will always review the litigation in the light of the dispute in question or the principles being investigated. Under normal circumstances the accounting experts according to O’Connor, (2005, p 35) are retained to undertake a thorough quantification, calculation and commendation on the economic damages and losses that would have been suffered. The accountant is particularly sought in cases of criminal and civil cases.
The forensic accounting has always been classified under categories. These categories will determine the drafting of the letter of engagement. The categories are inclusive breach of contract or torts, business of personal disagreements, valuation of businesses, claims concerning professional negligence and crimes relating to fraud.
The aforementioned types of litigation Hoffman et al (2007, p 21) asserts that requires the accountant has sufficient information on the business and a thorough understanding of the business reporting system. In addition, the accountant should have vast understanding of the accounting procedures and principles. The understanding of the investigative and gathering techniques is equally important for the accountant to prepare for any such litigation.
The federal government, Federal Court of Australia (2008), may sometimes request for the income tax returns. In such cases, the independent accountant may have to prepare a report on the income of the client. This will be done by first writing the letter of engagement that will set out the terms of engagement and the between the client and the independent accountant. Within the letter the independent accountant will always specify he relevant information that may be needed of the information on which clarification may be sought.
The letter also specifies for the client the legal requirement that the client may have to ascribe to. In additions the letter will specify the legal responsibility that the client will have to take in the event that he contravenes the legal expectations. O’Connor (2005, p 63) argues that the letter ensures that no information is overlooked by both the client and the independent accountant and the right statements are prepared from the provided information.
Forthwith, it therefore becomes imperative that one understands the difference between an accountant and an expert accountant. While the accountant would be referenced mainly to a residential chief accounting officer, Peter McClellan (2007, p 24) argues that the expert accountant on the other hand will refer to an expert accountant who handles the firm’s statement only of a specific nature. For example, the resident accountant will handle all the financial matters of the firm while the expert accountant will only handle matters that would be incidental in the preparation of income tax returns. The expert accountant, Dunn et al (2002, p 54) asserts should also handles issues only on the request and as a contract with the client; the accountant on the other hand has the responsibility of handling the financial matters of the firm on as they arise basis.
O’Connor (2005, p 24) asserts that subject to the legal requirements or in spite of the same, the expert has no mandate to question the integrity of the accounting system for as long as it is outside its engagement mandate. The discovery of irregularities and defalcations is utterly out of the mandate of the accountant expert even where such exist. The expert may only render services such as would be incidental in the preparation tax returns for the firm.
Consultancy and expertise have sometimes been used interchangeably. However, there is a very elaborate functional difference between the two. The function of the expert will extend to the making of judgment strictly based on the facts. The testimony prepared in any legal proceedings by an expert within the mandate of Hoffman et al (2007, p 35) will be largely factual and with due logical support. The consultant on the other end has the mandate of offering options to any stalemate; the option will take both positive and negative orientation.
The expert will always be widely recognized as having techniques and skills that can be used in offering decisions that are justly, rightly and wisely informed. APES 215, (2004, p 31) records that experts are normally accorded status and authority by their peers with respect to particular and very specific domain. The expert will generally have extensive ability and knowledge on a domain and the knowledge will strictly be based of extensive empirical research.
Expert knowledge on the other hand is the capabilities amazed through experience or the occupation the person is undertaking. Besides, the expert may be by virtue of the training undertaken, the profession, publications or education or the credentials the person may be having through work experiences and accreditation and honorary.
Expert witnesses, Dunn et al (2002, p 55) argues should audit, analyze and inspect records, statement and transactions of financial nature. There also prepare and undertake a thorough review of statements that concern inventories assets and liabilities of business. InCalifornia, the experts serve as forensic consultants and expert witness in courts. Cases such as those that relate to inheritance may require the presentation of the valuation of the deceased’s estate value in court, this call for the services of an expert account.
Accounting experts also provide testimonies and reports prepared in an expert manner to the judges for purposes of litigations. Lawyers, insurance firms, attorneys and government agencies may also find the testimonies and the reports incidental. These records according Dunn et al (2002, p 55) will be used in court arbitrations and trials inCalifornia. Within the strength of this argument, independent experts become a very integral component of the Californian legal system.
Legal suites involving the contesting of wills find the services of the independent expert quite insurmountable. In cases of this orient, the complainant and the defendant alike may find it paramount to engage the services of the expert. The expert would be an expert accountant who may undertake the valuation of the estate for the purposes of presenting the information to the courts as part of the defense.
Businesses may be taken to court either by an individual or the government for tax evasion. In circumstances of this nature, the services of the expert accountant may also be sought as was mentioned earlier. The expert accountant will come in to undertake a thorough audit of the financial position of the firm and prepare a report that would be presented to the court as part of evidence. While the resident accountant will provide any requisite information the evaluation of the position will strictly be left to the expert accountant.
Individuals sometime retire and have a lot of pains having their retirement benefits processed. The services of the independent expert would also assist in speeding up the process of benefits processing. The independent experts will adequately interpret the laws according to Dunn et al (2002, 49) concerning the payment of dues for retirees and collect information from their client, subject to the signing of the letter of engagement. Forthwith, the independent expert will advice the client and defends the client in a court of law concerning the suite that would have been prepared against the agency in charge of payment of the dues.
Hoffman et al argues (2007, p 32) that independent accountants have been termed as very effective inAustralia. Surveys show that the independent witnesses make litigation inAustraliarelatively fast and effective. While there have been a few cases cited inSydneywhere independent accountants were compromised to give misleading information. Nevertheless, according to the survey by Hoffman et al (2007, p 23) 95% of the independent experts have provided very incidental information to the legal system.
The isolated cases in the provision of information by the independent experts have been very exclusive to cases of estate valuation. Apparently the independent had been compromised by the clients to give information that would have the litigation rulings go in their favor. While these cases seem isolated, they have acted as eye openers for the judicial system in the largerAustralia. The isolated cases notwithstanding, the role of independent experts in the judicial system inAustraliaand world over remains crucial is the meting of justice.
The letter of engagement according to the ASAE 3000 (2006) has a number of issues that are made clear to both the client and the independent expert. To begin with the letter seeks mandate from the client on taking responsibility on behalf of the client on a particularly matter. Within the letter the independent expert will specify the information that he deems incidental and that will need to be furnished with the client. This information will be used in the preparation of the requisite documents, and assists in avoiding to overlook any pertinent information.
The letter of engagement according to Hoffman et al (2007, p 23) also seeks to clarify the legal responsibility of the client in the entire process. The letter acts a contract between the independent expert and the expert accountant through stating the terms of reference. Ideally, the independent expert through the letter of engagement assures the client on their commitment to pursue defense for their client to the very letter based on the information provided by the client. However, it needs to be appreciated that the independent expert is never an advocate for the client, rather, the expert only provide factual incidental information that can assist in the defense for the client.
Any contract according to the APES 215, (2004, p 43) will always indicate the monetary terms. Within the letter of engagement the independent expert specifies the fee that is to be paid by client on the commencement of the services and at the termination of the services. The letter also shows the duration of the contract with the specific area of coverage. The letter binds the parties through the signing of the letter once the client understands the inherent terms of engagement.