The expert report and reporting in forensic engagements

The company has traced the fraud, valued the loss and decided to sue. Now the forensic accountant must put it all in a report that a judge, lawyers and opposing experts will read line by line. A good report can win the case. A poor one, with unclear findings, unsupported opinions or unexplained jargon, can lose it even when the investigation was good. The expert report is the product of the whole forensic engagement.

This topic covers the purpose and importance of the forensic expert report, the types of report, the contents (scope and purpose, evidence analysis, conclusion and recommendation, appendices, executive summary, format and style), the duties of an expert witness, and tips for writing a report that stands up in court. The previous topic covered professional negligence. This completes the Audit, Assurance and Forensics course.

Key terms in plain English

Syllabus check

This topic is in syllabus area D, forensic accounting services (15% of marks). It covers:

• reporting in a forensic engagement
• the contents of a forensic expert report
• the duties of an expert witness

CAMA 2020 and forensic reports

The Companies and Allied Matters Act 2020 (CAMA 2020) is the company law of Nigeria. The sections below apply to this topic.

The rules in more depth

Reporting in a forensic engagement

At the end of any professional engagement, the expert gives a report to the person or group that commissioned it. In a statutory audit, the report goes to the shareholders, who own the business. In a forensic engagement, the report goes to the person or persons who commissioned it, such as the board, the audit committee, a firm of lawyers, an insurer or a court.

A forensic expert report is a document that contains the summary of the findings and conclusions of a forensic investigator. It forms part of the evidence in court, in civil or criminal proceedings, or in a security incident or compliance audit.

Types of forensic expert report

• Crime scene report: describes the scene of the wrongful activities.
• Digital forensic report: gives a detailed analysis of digital evidence.
• Forensic fraud report: sets out the findings of a fraud investigation, such as the method, the amount and the people involved.
• Autopsy report: contains the details of the examination of a deceased person.
• Toxicology report: gives the analysis of toxic substances.

An accountant normally writes the forensic fraud report, the damage calculation report and, with a specialist, the digital forensic report.

Importance of the report

• It supports evidence-based decision-making.
• It gives accountability: it promotes documentation of findings and investigation, and shows who ought to take responsibility and what should be done to prevent unethical activities.
• It promotes transparency, with a clear and detailed record of the investigation.
• It supports justice as a means of settling disputes.

Purpose of the report

• To be a source of evidence in legal proceedings.
• To support the investigation through a record of the evidence and the analysis.
• To provide analysis that helps in making conclusions and recommendations.
• To help in making informed decisions.
• To avoid a miscarriage of justice.

Contents of a forensic expert report

(a) Scope and purpose of the engagement. This section deals with the scope and includes the reason for the report; the objectives and the questions the investigator was asked to answer; and the scope and limitations of the analysis. It must be concise, specific and relevant to the case, define all acronyms used and give a brief overview of the methodology and tools used.

It also states who instructed the expert, the date and terms of instruction, the documents received, the people interviewed and the expert's qualifications.

(b) Evidence analysis. This section presents the facts and findings. It includes:

• relevant supporting evidence, and possibly screenshots;
• evidence and analysis organised in a logical, chronological or thematic way, depending on the case;
• facts that explain how the data was collected, preserved, examined and verified using standard forensic procedures;
• analysis expressed objectively; and
• facts that are clear, without speculation, jargon or opinion mixed into the facts.

(c) Conclusion and recommendation. This summarises the main outcome and answers the questions in the scope and purpose. It must rest on evidence and analysis and not on personal views or assumptions. It should be concise, coherent and consistent with the report's objective and scope; give actionable suggestions; and guide the client, court or organisation that commissioned the investigation.

(d) Appendices. Additional information that supports the main body: raw data; graphs, tables and other supporting material; and diagrams. They should be relevant, accurate and complete, without unnecessary or repeated information.

(e) Executive summary. A short overview of the report's purpose, scope, evidence, analysis, conclusion and recommendations, highlighting the key points. It should be written last, after the body, for a non-technical reader, in simple and clear language that avoids ambiguity. It should be concise, informative and persuasive, and capture the reader's attention and interest.

(f) Format and style. Layout, font, colour, spacing and headings, numbering and page numbers. The report should be easy to read and comply with the guidelines and standards of the client, the court or the organisation. It should be checked for spelling and punctuation errors and typing mistakes.

Essential contents for a court report: Bright Pharmaceuticals

For the investigation into the procurement manager, the report for court would contain:

• an executive summary
• the instructions, the scope and the limits
• the experts' qualifications and independence
• the method followed, including how the evidence was secured, such as forensic images of devices and the chain of custody
• the findings on the inflated invoices, with comparisons of invoice prices to quotes and contracts, the forged electronic signatures and their logs, the payments and the bank accounts that received them
• the amount of the loss and how it was calculated
• the evidence on the properties in the relatives' names and the funds used to buy them
• the conclusions, with the assumptions made and the matters on which the expert is unable to give an opinion
• recommendations for recovery and control improvement
• appendices with schedules, documents and logs
• a declaration that the expert understands his duty to the court and that the report is true and his own opinion

The expert's duties

An expert witness gives independent opinion on matters within his expertise, and his main duty is to the court, which overrides any duty to the person who pays.

The expert must be independent and objective, must not advocate, must state the facts and assumptions on which opinions are based, must say when a matter is outside his expertise or when an opinion is provisional, must change an opinion if the evidence changes, and must disclose anything that may affect his independence, such as a past relationship with the client.

The expert may be cross-examined on the report, so every statement must be supported by evidence that he can produce. Where there are experts on both sides, the court may order them to meet and prepare a joint statement of points of agreement and disagreement.

Writing tips

• Write for a reader who is not an accountant. Explain terms and avoid jargon.
• Separate fact, assumption and opinion clearly.
• Use numbered paragraphs so that they can be referred to in court.
• Show the working for every number, and tie each to a source document.
• Present figures in schedules, and show alternatives and ranges where the result depends on an assumption.
• State limitations plainly. A report that hides its weaknesses will lose credibility when they are exposed.
• Have the report reviewed by a second partner and by the instructing lawyer, who can check legal points but must not change the expert's opinion.
• Keep a file of all documents and notes, as these may be called for.

In Nigeria, the report is usually adopted by the witness when giving evidence, subject to the rules of court on expert evidence, and must comply with the Evidence Act on documents and electronic records.

Worked examples

1. To whoever commissioned it: here the company, usually through the board or its lawyers.
2. The distribution and use are stated in the report to prevent others relying on it.

1. That is opinion presented as fact, with no supporting evidence.
2. Rewrite: "Payments of ₦X were made to an account opened in the manager's name; documents A to F support this".

1. The summary should be written last, when the findings are final.
2. Otherwise it may not agree with the body.

1. The expert's duty is to the court, so he must not leave them out.
2. He explains this to the lawyer and may withdraw if pressed.

How to score full marks

• List the sections of the report in order.
• Add what each section must contain, in one line.
• Mention objectivity, no speculation and a non-technical summary.
• Apply the list to the facts of the case.

Common mistakes in the exam

• Saying the report goes to the shareholders.
• Putting opinion into the evidence section.
• Omitting limitations and the executive summary.
• Forgetting the expert's duty to the court.

Quick revision

• Reported to the person who commissioned the work.
• Scope, evidence, conclusion, appendices, summary, format.
• Objective, clear, evidence-based, no jargon.
• Duty to the court comes first.

Practice questions

Questions 1 to 10 are multiple choice. Questions 11 to 13 are written. Try each before opening the answer.

Model answers

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