As both courtroom witness and frequent lecturer on the CPA’s role in courts, Samuel Derieux, a retired Deloitte & Touche partner points out that “the accountant must be comfortable with the testimony to be given. If not, the accountant would be obliged to withdraw.”
When testimony becomes biased, the CPA’s objectivity can be challenged, putting his reputation at risk. And if jurors see the accountant as a ‘hired gun,’ the testimony would be discounted, he said.
Morton Levin, a retired CPA in Hollywood, Fla., who has been active in this specialty field, is among those alert to the dangers. “Too many times we have seen evidence of firms selling their opinions for an easy ride in this high revenue field.”
As an illustration of how delicate is the balance between objectivity and advocacy, Derieux recalls the testimony of one expert (not a CPA) who favors the upper or the lower range of costs or rate of return estimates depending on which side of a case he is representing.
Derieux says the basic approach ought to start with candid discussions between lawyer and CPA, covering the facts and identifying issues the lawyer seeks to prove.
Then the accountant should develop his testimony, interpreting rules and procedures according to his best professional judgment. And if the result hurts rather than helps the case, then the accountant should withdraw rather than modify his testimony.
Derieux advises having it out with the attorney in a free and open discussion.
“Let the lawyers tell you if your testimony is helpful,” he says. Never agree to testify until you have the opportunity to understand the case and determine that you will be comfortable with testimony that will be helpful to the side you are asked to help, he advises.
Sometimes, there is a middle ground, when the CPA cannot testify but agrees to act as consultant to the attorney. Because this engagement does not extend to third party use, technical standards permit helping the lawyer build his case without any public notice of the CPA’s participation.
Overall, concerns about advocacy attract wider attention as services to lawyers grow in popularity.
According to Monte Kaplan, technical director, AICPA management consulting division, this service — though only three or four years old — generate important amounts of revenue; 10 to 15 percent for Big Six firms and for small firms specializing in this niche, up to 30 percent of their revenue.
But no formal effort is underway to examine the need for more stringent standards. Kaplan believes that the three management consulting standards issued in 1991 provide adequate guidance.
“Nothing before the committee would suggest a need for additional behavioral guidance,” he said.
Lawyers seem to concur here. Reflecting a common opinion among attorneys, Lewis Cohen, a New York lawyer and accountant, avers that in the discovery process, the cross examination will uncover incomplete or contradictory evidence from the expert witness.