Category Archives: Forensic accounting

Divorce Pitfalls

This content was provided by Larry G. Goldsmith, JD, CPA, MAFF.

My law school professor once said, “Be wary of what you don’t see and questions that remain unanswered”.

Professionally, I am a Financial Forensic CPA: a sleuth for money and assets. The biggest question posed to me by divorce seeking clients is, “Do I need to incur the expense of a financial detective in my divorce process?”

Divorces are expensive and emotionally draining. I love to hear that parties had the ability to cooperate and settle their financial divorce differences in a collaborative manner. However, do you know if you settled for an amount less than you were entitled to?

For instance, the income and tax returns of professionals and individuals who perform financial services, many not reflect their true income. Many professional service and financial service companies perform tax accounting on a ‘cash basis’ which under reports an individual’s income and equity interests. Some firms have loaded back-end incentive packages for employees which are not reflected in their current income. These incentives are reflective in their retirement payments instead of their current W-2 income.

I have seen many cases where a spouse planned his/her divorce years ahead of the actual filing. During that time, the spouse began squirreling way assets and income for his/her post-divorce life.

The Illinois courts have repeatedly held that when a divorcing party has an opportunity to exercise the legal process of discovery and chooses not to engage in the analysis, they will be denied claims of undeclared assets after the fact.

In simple terms, if you neglected to look for assets or income that your spouse hid or failed to tell you about, your spouse will get a pass, and you will not be able to force them to disgorge those undeclared monies and assets after the divorce is over. Is that something you can afford?

I have seen spouses with five, six and yes, even seven figure bank accounts, brokerage accounts, or even condo’s downtown that the wife didn’t know. If discovered years after the divorce the innocent spouse would be without redress.

Not all accountants are trained to be financial sleuths. Yes, they can audit corporate books, but they are unskilled in fraud detection. They have little experience with bad actors filing for divorce.

Occasionally, I’m called into a case where the innocent spouse feared the larger financial earner had been hiding assets. I take pleasure telling that spouse there are no significant assets missing. It allows both parties the peace of mind to move forward and settle their financial issues. Other times, the spouse is delighted when I have uncovered undisclosed monies and or assets.

You may want a Financial Forensic CPA, someone who is independent, with loyalties to you and not your attorney. Please feel free to contact me.

I am available to meet to discuss your situation and how I may assist you.

CJBS to be Featured Panelist at Love, Marriage, Divorce, and Real Estate Panel Event

Larry Goldsmith, head of CJBS Forensic Accounting and Litigation Support group, will be a featured panelist at Love, Marriage, Divorce, and Real Estate Panel Event presented by Compass Mortgage and @Properties.

Join us for this free educational event on Sunday, March 18, 7-10 PM.

Kasbeer Hall
25 East Pearson Street
Floor 15
Chicago, IL 60611


Questions or comments? E-mail Larry Goldsmith ( Larry is an experienced Financial Forensic expert and CPA who investigates and verifies financial income and assets in matrimonial matters.

Death Warrant in the Tax Proposal?

photo of Larry Goldsmith

Larry Goldsmith

The Senate and Congressional income tax bills propose to eliminate itemized medical deductions.  For the elderly, who depend on pensions and social security income, and who require nursing homes and private caregivers, this deduction is essential. Nursing home expenses and caregiver costs can easily exceed $100,000 annually. If an elderly individual with an annual income of $80,000 is forced to pay taxes on the $80,000, this individual will not have the financial resources for necessary living expenses.

Larry Goldsmith is a partner and director of litigation services at CJBS, LLC. Mr. Goldsmith is regularly engaged to be a financial forensic expert witness in matters of divorce and business litigation.

Questions or comments? E-mail Larry Goldsmith at if you have any questions about this posting or if he can be of assistance in any way.

Larry Goldsmith to Address Highland Park-Highwood Legal Aid Clinic

photo of Larry Goldsmith

Larry Goldsmith

Larry Goldsmith, J.D., C.P.A., M.A.F.F., will speak on the subject of Financial Discovery at the Highland Park-Highwood Legal Aid Clinic on Wednesday, January 18th, 2017 at 7:00 pm. Financial discovery, including careful study of tax returns, is an important part of the process for uncovering useful information in legal proceedings involving divorce or other litigation matters.

Larry Goldsmith is a partner and director of litigation services at CJBS, LLC. Mr. Goldsmith is regularly engaged to be a financial forensic expert witness in matters of divorce and business litigation.

The Highland Park-Highwood Legal Aid Clinic is located at 1830 Green Bay Rd. in Highland Park, Illinois. Phone: (847) 926-1867.

Questions or comments? E-mail Larry Goldsmith at if you have any questions about this posting or if he can be of assistance in any way.

Considering a Forensic CPA? Remember That Credibility Means More Than the Sticker Price

by Larry Goldsmith, CPA, JD, CFF, MAFF

I just hung up the telephone with a tire kicker — someone who is shopping for a financial forensic expert to use their expertise to confirm or deny the existence of damages. And, like all tire kickers, this person intends to make their decision primarily based on price; in this case, the forensic expert’s fees.

It reminds me of the true story of a doctor client of mine who was building a medical center for his practice and was outraged by the fees being charged by the general contractor. The doctor, believing himself to be smarter than the contractor, decided he would save money by overseeing the construction himself. Obviously, the doctor did not possess the skills learned through experience that the general contractor possessed. The building’s completion was delayed by two years and suffered a 100% increase in overrun costs as the subcontractors played the doctor for the fool that he was. The project ultimately went into bank foreclosure and the unfinished building was sold at auction. The moral: experience and training are key elements when considering the retention of an expert. Price can be a factor but it should not be the primary factor.

The practice of forensic accounting has recently become a hot service. Both CPA firms and non-CPA financial accounting companies are claiming “expertise” in this area and clamoring for business. I regularly meet with CPA’s and non-CPA’s who claim to be financial forensic experts, and I generally find that their claim to be an expert is based on one of the following:

  1. They are a CPA and have worked in auditing companies
  2. They are a CPA who was grandfathered the designation of a Certified Financial Forensics (CFF) because they had a CPA license for 10 years and paid a fee.
  3. They have a keen eye and were self taught.

Here’s an example of what can happen when a person involved in a legal action does not verify the credentials of their accounting team:

Awhile back I received a call from a woman sobbing on the phone. She said that she was in the middle of a divorce, her husband of several years had stolen her premarital money, and she needed to hire a forensic CPA immediately. After calming her down I asked her where she was in the divorce process. She said that she had just left the courtroom having learned that her “expert witness” lacked the credentials of an expert, had never testified before, and was not even a CPA. Apparently, her so-called expert’s only credentials were that she was a self-taught bookkeeper for 10 years. The Court refused to accept the presented witness as an expert.

In this case, the woman who called me suffered because her “expert’s” findings and opinion were excluded and never heard or read by the court. Her husband’s expert, however, was permitted to present his opinion. Sadly, I had to explain to her that an expert can only be retained in the window of time permitted by the Court. Once that time ends, only the court can grant a party the authority to retain an expert. Her attorney recommended the attorney’s friend as an expert, the attorney and the expert failed to provide the expert’s credentials to the client.

Forensics is the science of investigating people and money. As a science there is methodology, there is testing and there is specific analysis that an experienced financial forensic expert will use. The methods may differ but results should be constant given the similarity of assumptions.

Everyone on my staff at CJBS, including myself, are CPAs who have received at least 40 hours of class room instruction before taking a test in financial forensics. All of us were required to work on engagements to gain experience, and write an actual expert opinion report that was then graded by the National Association of Certified Valuators and Analysts before we received our Masters Analyst in Financial Forensics designation (MAFF). Our expertise in forensic accounting is not wishful thinking; it’s the result of hard work and experience.

CPA’s and other professionals who have not been schooled in forensics may have professional skills but those skills may not be forensic skills. It is important to remember that there is a difference between an auditor and a financial forensic expert: the job of an auditor is NOT to detect fraud but rather is to verify the accuracy and correctness of financial reporting.

The financial forensic expert may be retained to determine if there is a misstatement of financial information, calculate damages, or detect financial misappropriations. They begin studying the people involved before analyzing the data. They keep an open mind in their investigation and let the facts dictate the findings. In my view the forensic expert tries to look at a larger view of a given situation; the auditor only looks at a narrow section of the financial picture.

Last year I was retained to analyze an expert’s report as to damages. The expert retained by the other side of the case calculated damages using an accounting definition of damages; standards that would have been acceptable by the court. For example, he excluded from profits the salaries and benefits of the business shareholders. When my report called attention to the numerous errors in the report and the miscalculations by the other side’s expert, the opposing side conceded rather than risk an embarrassment.

Your financial expert does matter. Your expert has to be able to investigate and to communicate the findings to your attorney, and to be able to communicate the findings to a judge and write a convincing opinion. Your expert must be able to educate the client and their attorney as to the findings and be objective in interpreting the results.

If I retain an expert, such as a medical specialist, I want to know their successes and failures; I want to know their experience handling cases like mine. Is the expert a “part time” expert, accepting engagements during slow periods, or does the expert specialize in my type of case? Is the person able to communicate and appear professional? Finally is the expert a good listener and are they paying attention to my issues and concerns? My last concern will be the cost. “Pennywise and pound foolish” is never more appropriate than when it is applied to choosing a forensic expert.

Questions or comments? E-mail me at if you have any questions about this posting or if I may be of assistance in any way.

Larry Goldsmith is an experienced Financial Forensic expert and CPA who investigates and verifies financial income and assets in matrimonial matters. CJBS, LLC is a Chicago based firm that assists its clients with a wide range of accounting and financial issues, protecting and expanding the value of mid-size companies. 

Overcoming the Myths: Taking Control of Your Money & Your Future

Larry Goldsmith, CJBS, moderates this dynamic conversation about women and finance.

Thursday, September 11th at The East Bank Club, 4:30 to 6:30 pm.

ModeratorLarry G. Goldsmith, C.P.A., J.D., C.F.F., and M.A.F.F.

Panelists are dynamic, experienced professionals who are passionate about empowering women to take control of their financial future.

Julie Murphy Casserly, CLU, ChFC, CFP  JMC Wealth Management Inc. Julie  is an 18year veteran of the financial services industry and has often  been referred to as a financial healer and visionary.

Carolyn Leonard, Founder and CEO DyMynd. Carolyn is a serial entrepreneur and was one of the first women to trade at the CBOE. She spent 21 years in the pits before starting  DyMynd.

Linda A. Lucatorto, M.Ed., CPC, Divorce Coach and Mediator, mentors clients during the transitions of divorce. She helps clients: learn about their options, set realistic expectations, make solid decisions and prepare for consultations with attorneys.

Women often forget all the financial decisions they effectuate. They make most of the health care decisions for family members and choose the specialists they see. They arrange for child care and make many of the important school decisions for their children, from pre-school to college. They also have crucial input about the purchase of family cars and household needs. They may even pay the household bills. Although They are always making financial decisions for others, most women don’t feel they are financially savvy. It is time to bust that myth!

I hope you can join Larry, Julie, Carolyn and Linda on September 11th at the lovely East Bank Club. De-stress after the work day and join us for interesting and thought provoking discussion, food, drink and camaraderie!

Questions or comments? E-mail me at if you have any questions about this posting or if I may be of assistance in any way.

Larry Goldsmith is an experienced Financial Forensic expert and CPA who investigates and verifies financial income and assets in matrimonial matters. CJBS, LLC is a Chicago based firm that assists its clients with a wide range of accounting and financial issues, protecting and expanding the value of mid-size companies. 

Ethics On The Front Lines

by Larry Goldsmith, CPA, JD, CFF, MAFF

I want to share three quick stories where ethical considerations were considered when accepting or continuing engagements.

Case #1:  A Partnership Dispute, or, The Devil and Larry Goldsmith

The Forensic Accounting portion of my business was uncharacteristically slow. Cases had been settled, and depositions and trials were delayed for months.

Then the devil presented me with the opportunity of a large new case which involved disputing business partners. The engagement required an analysis of expenditures, bank accounts, and the use of business proceeds.  Reading the complaint, I was mystified how the basic facts of the case could be presented so differently by the two parties.

During the interview process for the engagement, as I sat with the referring attorneys and listened as they explained to me their visions of the case, my mental calculator was adding up the staff hours that would be required from my firm. My hands were sweating with excitement.

The more I looked into the matter, the more I became concerned. The accounting records and general bookkeeping was weak. The prospective client took sizable amounts of cash from the company, allegedly to pay sub contractors. No Form 1099’s were issued and only some of the contractors would be willing to sign affidavits that they received the cash. It was explained to me that the company saved money by hiring contractors at a discount by paying cash. The prospective client asked me if I could simply accept his affidavit that the cash was properly spent for business purposes – even though this could not and would not be verified by anyone. Did I mention that the accounting records and the bookkeeping were weak?

Though I suggested alternative techniques where I could quantify the non-verified cash, it seemed that the prospective client only wanted me to investigate the egregious acts of his former partner. The whole thing seemed fraught with potential problems.

I was left with the question: should I accept this proposed engagement? If I answered entirely based on the size and cost of the engagement the answer would likely be yes. But I was concerned about possible ethical issues which seemed very likely to arise. The American Institute of Certified Public Accountants (AICPA) has published various professional standards to provide guidance in cases such as the one that confronted me.

The professional standards say:

Rule 102 of the AICPA professional standards.

In the performance of any professional service, a member shall maintain objectivity and integrity, shall be free of conflicts of interest, and shall not knowingly misrepresent facts or subordinate his or her judgment to others.

This is further discussed in the Litigation Services and Applicable Professional Standards publication 03-1 by the AICPA; “The expert does not serve as an advocate for the client’s position and, therefore should not subordinate his or her judgment to the client. The expert’s function is to assist the trier of fact in understanding complex or unfamiliar concepts after having applied reliable principles and methods to sufficient relevant data.”

Rule 201, General Standards, of the AICPA Code of Professional Conduct requires that engagements be conducted with “Due Professional Care” using “Sufficient Relevant Data.” According to AICPA Publication 03-1, “Due care requires diligence and critical analysis of all work performed.”  Furthermore, the AICPA requires that the practitioner “Obtain relevant data that is sufficient to provide a reasonable basis for conclusions or recommendations for any professional services performed.”

“The practitioner should consider analyzing key assumptions to determine whether they are reasonable. In several recent cases, experts had their testimony excluded because their opinions were based on assumptions that were deemed not reasonable.”

And finally, Rule 501-01, Acts Discreditable of the AICPA Code of Professional Conduct, states that a, “Member shall not commit an act discreditable to the profession.” Rule 501-04 states that a member shall be considered to have committed an act discreditable to the profession when, by virtue of his or her negligence the member, “Signs, or permits or directs another to sign, a document containing materially false and misleading information.”

Do I accept an engagement with my hands tied?  Do I accept an engagement where my objectivity is being compromised?  You’ll find my decision at the end of this article.

Case #2:

What to Do When Independence is Compromised?

An attorney referred me to provide financial forensic analysis to a woman going through a divorce. In discussions with her I quickly realized that, not only did I know her husband personally, but I had invested in some of her husband’s projects. The wife was impressed with my knowledge of her husband’s complex business structure and sources of revenue. And she was eager for my help. Though I had not been an investor in any of the husband’s projects/deals in the last ten years, I felt that questions concerning personal and professional integrity, independence and objectivity were sure to come up.

Again, I turned to the AICPA for guidance. The AICPA requires objectively rather than independence as a standard. Objectivity is a soul searching determination. Independence is fact driven.

I called the husband. I laid my cards on the table and told him that his soon to be ex-wife wanted to hire me to investigate his finances. Then I asked him if he found there to be a conflict.

The husband emailed me, his attorneys and her attorneys. In the email he stated that he and I (the two of us) had a previous business relationship; he welcomed my retention by his wife, but wanted his wife to be comfortable that we had a past financial relationship.

The husband told me that my professionalism and my fairness were comforting to him. He had heard stories of experts who performed needless analysis to increase fees and experts who would be an obstacle to any settlement.

During the engagement, we cut the husband no slack; we verified all business and personal assets including sources of income. My past relationship with the husband allowed my firm’s team to ask the right questions and know where to look for future income sources. This experience and knowledge saved the parties money, and gave the wife comfort that there was complete disclosure.

Case #3: An Unexpected Meeting…

I arrived at the charitable golf outing dressed in the height of sporting fashion, wearing my pink plaid golf shorts, my white gym shoe golf shoes and my pink polo golf shirt. To my surprise, the gentleman I was paired with had the same name as the attorney I was retained to testify against in an upcoming malfeasance case.

Maybe it was a coincidence, I thought. People often do have the same names.

I returned to the golf cart after practicing my putting and shanking some drives off the practice tee.  In the cart sat a disheveled man in his sixties who was lifting his glasses past his nose to read his cell phone.

After the introductions, handshake and chit chat, I realized that the man next to me, who looked like Mr. Magoo, was the subject of the malfeasance and he was the individual whom I would be testifying against.

I initially wondered if our golf game was an ethical violation. And my next thought was, did he know who I was and would he kill me?

The fact is, there was no violation of ethics in playing golf with the gentleman. We did not discuss his case and there was no disclosure on either part of our professional situations.

I was fortunate; he did not have a clue who I was. In fact three months later when I deposed him, Mr. Magoo failed to remember that we had ever previously met.

So… did I accept the engagement in Case #1…? 

One engagement can make or break a career. The grim thought of handcuffs being placed on me and seeing my career in tatters was all I needed to make my decision to walk away. This was one of those gut wrenching times when you just need to bite the bullet and say No.

I believe that our professional standards, were created to be a guide.  Sometimes our soul searching will provide the needed guidance.  Sometimes the engagement that we turn down is a blessing.

Questions or comments? E-mail me at if you have any questions about this posting or if I may be of assistance in any way.

Larry Goldsmith is an experienced Financial Forensic expert and CPA who investigates and verifies financial income and assets in matrimonial matters. CJBS, LLC is a Chicago based firm that assists its clients with a wide range of accounting and financial issues, protecting and expanding the value of mid-size companies. 

The 10 “Must Dos” After A Divorce

by Larry Goldsmith, C.P.A., J.D., C.F.F., M.A.F.F.

The court room drama has ended, yet too often the newly divorced fail to separate financially from their ex.  Failure to separate yourself and the ex’s credit cards, bank accounts and your financial plans may have undesired consequences.

Now that your divorce is finished, please consider the following as suggested actions:

  1. Review all bank accounts and brokerage accounts and IRA’s verify who the owner and beneficiary of each account is.
  2. Review all credit cards verify that only you are on these credit cards as an authorized user
  3. Send letters to former joint credit card companies informing them that you are divorced and no longer responsible for  liabilities on the old card
  4. Contact the insurance companies notify them of the divorce and that you did not want them to contact your ex and you do not want the ex as a responsible party.
  5. Verify the life insurance beneficiaries and owners.
  6. Verify all life insurance coverage
  7. Change your financial representatives, tax professionals, insurance agents etc. when appropriate so tat you have a loyal professional who will not disclose or work for your ex
  8. Notify the health insurance company, that you want your own account, your ex does need to get copies of your medical issues by logging onto the insurance company’s website
  9. Notify the school of the joint parenting agreement. While it may not apply to you, there are issues with parental kidnappings.
  10. Revisit your will and your financial plan. You may want to consider a change to the executor of your will, beneficiaries, or your health care agents.

Larry Goldsmith is an experienced Financial Forensic CPA who investigates and verifies financial income and assets in matrimonial matters.

CJBS, LLC is a Chicago based firm that assists its clients with a wide range of accounting and financial issues, protecting and expanding the value of mid-size companies. E-mail me at if you have any questions about this posting or if I may be of assistance in any way.

Forensics is About Teamwork…

Larry Goldsmith

by Larry Goldsmith, JD, CPA, MAFF, and Julieann Chaet, CPA, MAFF

So much is always happening in each of our own lives.  We have our kids, our parents, our friends, our jobs.  We have the maintenance of our homes, our cars, and even ourselves, if we allow that.

The Forensics Team at CJBS can be broken down into these smaller pieces.  Each of us has our family, friends, and homes.  In addition each of us has our own unique experiences in our education, skills, and knowledge.

The bigger picture of the Forensics Team at CJBS is that we are a piece of our client’s team.  The Forensics Team at CJBS works with our clients and their attorneys.  We collaborate to bring our own unique skill set to solve problems and create solutions.

I was at a seminar last week, and received an e-mail informing me that a client needed to talk.  I called the client back thinking that it had something to do with the case.  Maybe there was new evidence that was found.  Maybe the soon-to-be ex-spouse decided to do the right thing and turn over all the information we were pursuing.  Or maybe the client needed reassurance that we were progressing and discovering hidden money or property.  The phone call was neither of those things.  It was a client who was going to her divorce hearing the next day and was scared.  It was a client that just needed to talk.  It was a client who needed to know that we, her forensic team, was doing everything possible to make her next day, the day of her hearing, as successful as possible.  We spoke for about a half hour.  I had been in those shoes in a divorce, and it’s not a nice place to be.  At that moment I was more than her forensic accountant.  I was her friend.   I was part of the team of professionals who would together make her next days as successful as possible with the least anxiety as possible, if that’s even possible.

The Forensics Team at CJBS is a group of people working together with our client and her/his attorney to achieve the best result possible for our client.  We are passionate for both our client and the quality of our work product.

Julieann Chaet, CPA, MAFF

Julieann is the Manager of CJBS’ forensic accounting and litigation services practice.

Call Julieann at 847.580.5449, or e-mail:


Larry Goldsmith, JD, CPA, MAFF

Call Larry at 847.580.5427, or e-mail:

The Need to Invest in a Forensic CPA

Larry Goldsmith

Larry GoldsmithJulieann Chaet

by Larry Goldsmith, JD, CPA, MAFF, and Julieann Chaet, CPA

So, there I am stuck in traffic attempting to get home from my day at the office, and I cannot find anything on the radio that I want to listen to. One commercial after another, or one not necessarily bad song, just not what I care to listen to, and this commercial comes on about investing in gold.  You’ve probably heard the commercial a 1000 times, and either acted on it, thereby making an investment in gold, or thought, when is this commercial going to end?  That’s when this blog was born.  The same gold commercial that I’ve listened to 1000 times, for whatever reason in that particular moment on that particular day, was a brainstorm.  That is to say the investment in gold can be comparable to the investment in a forensic accountant.

Give me a moment while I explain.  Darrell D. Dorrell and Gregory A. Gadawski are the authors of many forensic accounting textbooks. Their definition of forensic accounting is “the art and science of investigating people and money”.  This is precisely what we at CJBS do in the forensic department.  Our team investigates any documents that relate to someone’s behavior and habits.  For example, whether a corporate case or a personal divorce case, two of the first items we ask for are the known bank account statements and the credit card statements.  Bank statements and credit card statements show the habits of the company or the habits of an individual.  For example, were the appliances purchased for the work place or were they for the home? Why does the company credit card show a down payment on an auto when the company that s/he is employed for pays the lease of the auto that the employee is driving? Why is the business doing so poorly that they are increasing the line of credit if sales are on the rise?

Forensic accounting is about finding the gold. Of course gold can be the gold bar that you think of when you hear the commercial for investing in gold, but gold can come in not-so literal packages. How about a real estate property that one spouse never knew existed?  Or receiving monthly child support payments without going back to court each month to fight for what was already determined to be your lawful right? How about the company that is continually just breaking even only to discover that company’s monies was used to pay for an employee’s personal expenditures?

Sometimes there is one working spouse that controls all the money of the household.  The other spouse is at home to raise the children, while trusting his/her partner to invest the monies for their collective benefit and ownership. Years later the marriage may be at a breaking point, and the spouse that stayed home may not be aware of what assets were purchased or where the monies have gone during the marriage. Many times the stay at home spouse lacks the knowledge of which bank accounts exist.

It is the forensic CPA that can discover unknown assets such as real estate properties or bank accounts. Attorneys went to law school to study the law. CPAs like numbers and they have the education to understand the flow of these numbers. Forensic CPAs differ from ordinary CPAs in that Forensic CPAs utilize specialized techniques to find the hidden assets and income.

As forensic CPAs at CJBS, our team is trained to find the gold.

CJBS, LLC is a Chicago based firm that assists its clients with a wide range of accounting and financial issues, protecting and expanding the value of mid-size companies. E-mail Larry at or Julieann at if you have any questions about this posting or if we may be of assistance in any way.

Julieann Chaet, CPA

Call Julieann at 847.580.5449, or e-mail:


Larry Goldsmith, JD, CPA, MAFF

Call Larry at 847.580.5427, or e-mail: