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crunching numbers

Calculating Lost Rental Income for Insurance Claims

Written by Charles Amodio on . Posted in Forensic Accounting, Insurance Claims Services.

crunching numbers

When a property becomes uninhabitable due to damage from fire, storms, water, or other covered perils, landlords may lose out on rental income. Fortunately, many insurance policies include Loss of Rent or Business Income coverage, which reimburses property owners for the rental income they would have earned during the period of restoration. Calculating lost rental income accurately is crucial for a successful insurance claim. Here are some points to consider when evaluating a lost rental income claim.  

1. The Insurance Policy

Before calculating your claim, review your insurance policy to determine:

  • Coverage Limits: The maximum amount the insurer will pay.
  • Covered Perils: Events for which you are eligible to file a claim.
  • Period of Restoration: The reasonable time needed to repair or rebuild the property.
  • Waiting Period: Some policies include a 24–72 hour waiting period before coverage kicks in.
2. The Period of Restoration

The period of restoration begins when the damage occurs and ends when the property is reasonably restored to its pre-loss condition, not necessarily when repairs are completed. This period must be:

  • Reasonable and Necessary: Based on typical construction timelines.
  • Documented: Through contractor estimates, permits, and repair schedules.

Insurers often require detailed evidence to support the claimed duration.

3. Identify Monthly Rental Income

You must determine how much rent you were collecting or expected to collect. Consider:

  • Lease Agreements: Show actual rental rates and tenant responsibilities.
  • Rent Rolls: Details the rental income and occupancy history per unit. 
  • Comparable Market Rent: If the property was vacant, use market analysis or appraiser reports to estimate potential income.

Be sure to exclude non-rent payments like utility reimbursements unless otherwise specified in your policy.   

4. Calculate Gross Rental Income Loss

Use the following formula:

Lost Rental Income = Monthly Rent x Number of Months Property is Uninhabitable

Example:

  • Monthly rent: $2,000
  • Property uninhabitable for 6 months
  • Lost rental income: $2,000 x 6 = $12,000
5. Deduct Expenses Saved During the Loss Period

Subtract any expenses you did not incur because the property was vacant. These may include:

  • Utility costs (if landlord-paid)
  • Maintenance or cleaning services
  • Property management fees (if charged per unit or based on occupancy)

This yields your net lost rental income.

Net Loss = Gross Rental Income – Expenses Saved

6. Provide Supporting Documentation

A well-documented claim is less likely to be delayed or denied. Include:

  • Lease agreements or rent rolls
  • Monthly profit and loss statements
  • Prior year income statements or tax returns
  • Payroll reports
  • Communications with tenants (e.g., notices to vacate)
Conclusion

Calculating lost rental income for insurance claims involves more than simply multiplying rent by the number of months the property is vacant. By carefully documenting income, understanding the policy, and factoring in saved expenses, you can present a well-founded claim.

For further information, please contact the experts at FAZ Forensics. 

wage laws

We Can Help You Stay Up-To-Date with NY’s Prevailing Wage Laws

Written by Samuel Tesfamariam Haile on . Posted in Forensic Accounting, Prevailing Wage Compliance.

wage laws

At FAZ Forensics, we support construction firms across New York’s energy sector in meeting the strict requirements of prevailing wage compliance under Article 8’s Labor Law § 220. Whether your project is funded by NYSERDA or tied to a local infrastructure upgrade, we help you stay aligned with state regulations—minimizing legal exposure and safeguarding your reputation.

How We Help

Our team conducts independent prevailing wage audits designed to identify potential risks and ensure full compliance with New York State labor standards. We work with both general contractors and subcontractors to review certified payroll records, evaluate worker classifications, and verify that wages and supplemental benefits meet or exceed published rates for each trade and county.

We understand that prevailing wage laws are complex and frequently changing. That’s why we stay up to date on Department of Labor requirements and bring forensic-level attention to detail to every engagement. Whether you’re undergoing a routine internal review or facing an external audit, we’re here to help you respond with transparency and confidence.

Key Areas We Address Include:

  • Certified Payroll Review: Ensuring your documentation supports compliance.
  • Trade Classification Analysis: Verifying workers are properly classified, as misclassification is one of the more common ways contractors violate prevailing wage laws.
  • Wage Rate Comparisons: Confirming actual pay meets or exceeds state-mandated rates, including a review of prevailing supplemental (fringe) benefits.
  • Restitution Pay Calculations: Quantifying underpayments and assisting with corrective action when discrepancies are identified.
  • Subcontractor Oversight: Assessing subcontractor compliance to limit prime contractor or project owner risk.
  • Audit Support: Assisting during agency reviews or investigations.

Our services not only reduce the risk of wage violations and debarment but also foster a culture of integrity and compliance across New York’s most important renewable energy and infrastructure projects.

Let’s Talk Compliance

If you’re managing a New York energy construction project and want peace of mind around prevailing wage compliance, contact FAZ Forensics today. We’re ready to provide expert insights, clear reporting, and reliable support tailored to your project’s needs.

Sources

https://www.nysenate.gov/legislation/laws/LAB/220
https://apps.labor.ny.gov/wpp/publicViewPWChanges.do?method=showIt&utm_source=chatgpt.com

Payroll Audit

Explaining Prevailing Wage Payroll Audits and Why You Should Care

Written by Noah Van Zandt on . Posted in Forensic Accounting, Prevailing Wage Compliance.

Payroll Audit

In the construction industry, particularly on publicly funded projects, prevailing wage laws ensure that workers are paid according to regional standards. A prevailing wage payroll audit is a formal review conducted to verify that a contractor has complied with these wage requirements. These audits are more than just paperwork as they help protect workers, ensure contractors follow through on their obligations, and make sure public funds are being used the right way.

A prevailing wage payroll audit typically involves examining certified payroll reports, timesheets, job classifications, fringe benefit contributions, and supporting documentation. The goal is to determine whether the wages paid match what is required under federal, state, or local prevailing wage regulations. According to the U.S. Department of Labor, these standards are established through the Davis-Bacon and Related Acts, which apply to contractors and subcontractors performing on federally funded or assisted contracts over $2,000 for the construction, alteration, or repair of public buildings or public works.

When performed by a forensic accounting firm, these audits offer an additional layer of assurance. Independent verification from a licensed professional carries weight with public agencies, prime contractors, and labor unions. It also gives contractors peace of mind that they are meeting their obligations and protecting themselves from potential penalties. Moreover, prevailing wage audits conducted by forensic accounting firms can serve as a critical tool for contract compliance and defense during Department of Labor investigations.

FAZ Forensics has conducted several prevailing wage audits on behalf of contract owners to verify compliance with wage laws. In our reviews, we have been the primary communicators with contractors and typically perform randomized sampling procedures and detailed reconciliations to confirm whether reported wage rates meet or exceed required thresholds. We have also served as a liaison between contractors and the Department of Labor when questions or issues have arisen, helping to clarify documentation and resolve concerns efficiently.

Such proactive audits not only help contractors avoid costly penalties and reputational damage but also serve as a defensible record in the event of a government audit or litigation. Ensuring transparency and accuracy in certified payroll submissions strengthens credibility with regulators and positions contractors/contract owners as trustworthy stewards of public funds.

Financial Statement Fraud

Warning Signs of Financial Statement Fraud with Examples

Written by Megan Kelly on . Posted in Forensic Accounting.

Financial Statement Fraud

The three primary categories of occupational fraud are asset misappropriation, corruption, and financial statement fraud. According to the Association of Certified Fraud Examiners’ (“ACFE”) 2024 Report to the Nations, in which real cases of occupational fraud were analyzed between January 2022 and September 2023, financial statement fraud, which occurs when a perpetrator intentionally caused a misstatement or misrepresentation in the organization’s financial statements, was the least common occupational fraud to occur but caused the greatest median loss. There are a number of reasons why financial statements may be manipulated, including attempts to secure financing, beating earnings targets to inflate stock prices, or to hide losses. Based on results of 2024 Report to the Nations, financial statement fraud represented only 5% of perpetrated fraud schemes, but results in median losses of $766,000 per case.

Financial statement fraud can be represented by net worth or net income overstatements or understatements, and can be carried out by reporting fictitious revenues, improper valuations, improper disclosures, incorrectly reported liabilities and expenses, and timing differences. Some of the most well-known frauds have been financial statement frauds, including the Enron, WorldCom, and Wirecard frauds.

Some examples of different types of financial statement fraud include the following:

  • Fictitious revenues: In 2000, Lucent Technologies admitted to improperly recognizing revenue, by overstating revenue by approximately $700 million by recognizing revenue on certain transactions that in which products had not yet been sold or accepted by the customer.
  • Improper valuations: In 2015, Toshiba was found to have delayed recognition of the impairment of certain nuclear power assets, thus reflecting overstated assets on the company’s balance sheet, thus improperly presenting the overall health of the company.
  • Incorrectly reporting liabilities: In 2001, Enron was found to have used special purpose entities to hide massive debts and liabilities, which artificially inflated equity and understated liabilities. This scandal lead to the collapse of Arthur Andersen, at the time one of the five largest accounting firms, and the creation of the Sarbanes-Oxley Act.
  • Improper disclosures: Valeant Pharmaceuticals concealed a key business relationship, and failed to disclose to investors that a captive pharmacy network was used to drive sales. The Securities and Exchange Commission found that Valeant failed to disclose the material impact of revenue it received from drug wholesalers, and that executives chose to present GAAP and non-GAAP financial measures to misrepresent revenues.
  • Timing differences: In 2004, Bristol-Myers Squibb agreed to pay a $150 million settlement to the SEC for inflate earnings prior to reporting to meet earnings expectations. Bristol-Myers Squibb booked future sales as current period revenue to boost sales, thus prematurely recognizing revenue.

Financial statement fraud can often be difficult to detect because it is carried out by those at higher levels within an organization. In certain instances, financial statement fraud is covered up by collusion and the override of internal controls; these situations often can only be created by those at the management or executive level. However, patterns of unusual activity can point to deeper issues that may be obscured via financial statement manipulation.

  • Aggressive revenue recognition policies: Examples include recognizing revenue before the delivery of goods and services, as described above in the Lucent Technologies fraud scheme. Aggressive revenue recognition can also include misrepresenting the progress on a contract to recognize revenue sooner than actually earned.
  • Management override of internal controls: Bypassing of internal controls by management or company executives is a red flag, and this behavior creates additional risk for a company. Maintaining a strong control environment can help prevent fraud, but overriding internal controls weakens the overall control environment of an organization.
  • Turnover in accounting roles: If a company experiences high turnover in key accounting roles, this may suggest turmoil within the accounting department of the organization. High turnover could result in weakened internal controls, which creates an environment in which financial statement fraud can occur.
  • Exceeding targets in a down market: If a company is consistently beating earnings targets in a down or volatile market, this could suggest that the finances of the company are being manipulated.
  • Excessive related-party transactions: Related-party transactions can be used to conceal financial results, especially if these transactions are disclosed improperly or outside of the normal course of business.

According to the ACFE Report to the Nations, 43% of occupational fraud cases were uncovered by a tip from a whistleblower. The next most common method of detecting occupational fraud is through internal audits, which only identified fraud in 14% of the cases analyzed. Of those who have reported occupational frauds, more than half of the whistleblower tips came from employees. Creating an anti-fraud culture is a cost-effective way for companies to prevent fraud, and it signals to employees, vendors, and investors that the organization does not tolerate fraud and has open communication channels to prevent fraud. Although financial statement fraud can be difficult to detect, establishing a strong ethical culture and being aware of common red flags can aid in its prevention.

Ledger Paper

AI: Where Have All The Yellow Legal Memo Pads and Green Ledger Paper Gone?

Written by Mike Brown on . Posted in Forensic Accounting.

Why am I writing about yellow and green ledger paper? As a Forensic Accountant with over 40 years of experience, I often was exposed to these artifacts of the past and was impressed by their practicality, functionality, and the psychological benefits they provided.  2025 celebrates the 70th birthday of the unofficial coining of the term Artificial Intelligence (“AI”) by John McCarthy and it seems like an appropriate juncture to celebrate the positive attributes these venerable color schemes have provided lawyers and accountants with over the years.

Yellow and green are the color cornerstones of the legal and  accounting professions. Let us not lose sight now of the shades they can provide in the AI world we now reside in. With all the technological commotion and upheaval, let us not forget the clarity, creativity, consistency and comfort yellow and green can continue to provide. This short piece will share with you some fun historical facts and fiction, key discoveries, and milestones more specific to the field of accounting, without leaving the attorneys in the shade. I will also comment on some new challenges and risks to the legal and accounting professions as a result of our new friend in the room, and the potential failure of not embracing the tactile feel of looking through the yellow legal memo pad and green ledger paper of the past.

Ancient Accounting

The last 1,000 years have brought a tremendous amount of growth and prominence to the accounting profession, not without a few stumbles and fumbles. The transformation has been like traveling through Walt Disney World’s Spaceship Earth: through ancient Mesopotamian times from the use of clay tablets, handwritten ledgers, tally sticks, and of course the abacus, to today’s cloud-based and AI-powered accounting systems.

Accounting is the basis of business decisions, and the field has gone through a great deal of development more recently in the last 50 years. Even with all the constantly changing technologies, the more things have changed, the less things have changed. The accounting language remains the same: the debits are on the left and the credits are on the right!

The History of Green Ledger Paper

You may or may not have asked, or ever thought, or even care, why accounting ledger paper has historically been green. It is the green tint that serves several practical and productive purposes: 1) Green reduces eye strain as the green color is a little bit easier on the eyes than the white; 2) Green provides enhanced readability by reducing the glare from lights; 3) Green is often associated with calmness and focus –  like a beautiful field or forest; 4) Tradition – it dates back to the 20th century when strong and sturdy green paper helped preserve and maintain financial records; and 5) United States currency is green and it reinforces the appearance of financial stability.

OK, how about all those pre-historic green eyeshades – I knew there would be a question about that! These green visors also serve a practical purpose beyond a stylish trend; it protected accountants’ eyes from the strain and other effects caused by working under direct light. During the late-1800s up to the mid-1900s accountants widely used these eye shades to help reduce the glare from desk lights that were affixed to work desks to illuminate the documents. Today, the old desk lights have been replaced by fluorescent lighting (which is now being replaced by LED lights) which does not put a lot of strain on the eyes.

For the lawyers in the room: did you ever wonder why your legal paper is yellow? The paper is yellow for some similar reasons as accountants – great minds think alike! 1) Yellow has less glare as black ink stands out more clearly against yellow than white; 2) Yellow background improves readability and the psychological benefits of yellow supposedly boosts creativity as well as retention; 3) Yellow may assist lawyers to think more critically; 4) Yellow’s distinct color can help lawyers locate important documents within the white paper ocean we used to live in; and 5) Yellow projects  a certain level of professionalism and perceived authority.

By the 1950s yellow legal pads became a staple in many law offices and still today represent the tradition of the legal profession and symbolism of expert professionalism. For all you paper historians out there, Thomas Holly, a paper mill worker in Holyoke, MA, (GO UMASS!) is credited with inventing the legal pad in 1888, although it was originally produced in white.

Accounting Ledger History

Let us move on to one term accountants like to start with: the Who/What/Where/When/Why and How the company’s General Ledger is maintained. We can talk about the fascinating General Ledger in more detail another time (that could be a snoozefest!) but here is some history of the origin of its name.

The term ledger originates from Middle English and the word “leggen,” the Old Dutch word “leggen” or the Old English word “lecgan” all meaning to lay or lie down, or to place or to set down. Appropriate, given a ledger is where yesterday’s and today’s financial records are “laid down” in a permanent format. Before the double-entry system of accounting (this will be briefly addressed in a moment), merchants in ancient times used bound books to record transactions and these were called ledgers because they contained transaction and entries that were laid down.

Artificial Intelligence

How can the colors of green and yellow and the ancient ledger assist us in today’s AI world? Let us briefly talk AI.

Did you know there is actually an originator of the expression “Artificial Intelligence”? His name is John McCarthy. McCarthy is recognized with coining the term “Artificial Intelligence” back in 1955 when he created one of the most influential programming languages in the context of artificial intelligence.

He developed the concepts of time-share systems, allowing multiple users to interact with a computer simulation, a fundamental step toward modern computing. McCarthy also worked on automated reasoning, which helped computers simulate human logical thinking. In 1971, McCarthy received the Turing Award, the highest honor in computer science for his contributions to artificial intelligence.

2025 and Beyond

As we all begin to work with and better understand AI, the development of AI protocols, and its impact to society as a whole, the legal and accounting professions should not forget to use all the available assets of ancient times. Green ledger and yellow legal memo paper lenses can assist in evaluating the decisions and outputs of Generative AI and the risks of jumping to so called “Hallucinations” that used to be referred to in the past as wrong, incorrect, or misleading!

AI can assist accountants by providing automated data extraction and cleansing, the detection of anomalies in financial data, and predictive analytics for fraud risk assessment.  It will also increase the speed of performing analytics, investigations, and enhance fraud protection, however one must remember not to look through these AI rose-colored glasses without vetting your inputs, sources and results.

Be forensic out there, have your old spectacles in sight or at the very least you can have a black cup of coffee with your face in the sun and the trees or lawn in the background and remember to stop at any red light on the road that you may see.

Researched on AI, not authored by AI!

Discontinued Expenses

Discontinued Expenses (No-Fault)

Written by FAZ Forensics on . Posted in Insurance Claims Services.

Understanding Discontinued or “Saved” Expenses in a No-Fault Claim for Lost Self-Employment Earnings

When a self-employed individual is injured in an automobile accident in New York, they may be entitled to recover lost earnings through a No-Fault insurance claim. Under New York’s No-Fault law, claimants can receive compensation for economic losses – such as medical expenses and lost income – without needing to prove fault or negligence. At FAZ, we assist the claimant with the lost income portion of their No-Fault claim.

Ultimately, we are calculating potential lost net self-employment earnings suffered by the claimant. When it comes to calculating lost net self-employment income, the process is more involved than simply calculating lost gross self employment income. A critical part of this calculation includes an understanding of discontinued, or “saved,” expenses.

What Are Discontinued or “Saved” Expenses?

Discontinued (or “saved”) expenses are costs, typically variable in nature, that the claimant would not incur subsequent to the date of loss.

In the context of a No-Fault claim, only net self-employment earnings are reimbursable. This equals the amount they would have earned after deducting expenses that would not be incurred as a result of the accident.

Common examples of saved expenses in a No-Fault lost earnings claim include:

  • Materials or inventory
  • Fuel and transportation costs
  • Contract labor costs
  • Utility or overhead expenses that were not incurred as a result of the accident

It’s important to note that fixed expenses – such as office rent or insurance premiums – are not usually considered saved expenses, as they continue regardless of the individual’s ability to work.

Why Discontinued Expenses Matter in a No-Fault Claim

New York’s No-Fault insurance system aims to reimburse real, measurable losses. When a self-employed person submits a claim for lost self-employment income, they must prove what their net earnings would have been, had they not been injured.

This means gross revenue alone cannot be the basis for the claim. Expected lost gross self-employment earnings are adjusted by deducting discontinued expenses, as a percentage of gross earnings.

Here is an example of how discontinued expenses are calculated:

A self-employed Uber driver files a No-Fault claim stating that, due to their injuries, they were unable to work from January 1, 2025 (date of loss), through January 30, 2025. The claimant reported $48,000 of gross earnings through Uber on their 2024 personal income tax return, or $4,000 per month. “Car and truck” expense, which the claimant advised is comprised fully of fuel expenses, totaled $24,000 during 2024. Based on historical earnings information, “car and truck” expense totals 50% of the gross earnings generated during the year. This percentage is utilized in order to calculate the discontinued, or “saved”, expenses during the period the claimant was unable to work.

The claimant states that they were unable to work from January 1, 2025, through January 30, 2025. They  claim that they lost $4,000 in self-employment earnings during this period. The claimant is not accounting for the expenses that would be saved as a result of the accident.

The following example lays out how we utilize historical financial information to determine the extent of discontinued expenses that were saved during the loss period:

  • Annual Earnings – $48,000
  • Car and Truck expense – $24,000
    – Percent of gross earnings = 50%
  • LOSS PERIOD (1/1/2025 – 1/30/2025)
    – Lost Gross Self-Employment Earnings
  • $4,000 ($48,000 / 12 months)
    – Discontinued (Saved Expenses) @50% of Gross Earnings $2,000 ($4,000 * 50%)
    – Based on historical earnings information (2024 tax return)
    – Lost Net Self-Employment Earnings (1/1/2025 – 1/30/2025)
    – $2,000 (Lost Gross Earnings, less Discontinued Expenses)
Summary

In the context of a New York No-Fault insurance claim, understanding and accounting for discontinued or “saved” expenses is crucial when calculating lost net self-employment earnings. These expenses reflect costs that would not be incurred due to the individual’s inability to work, and must be deducted from expected gross self-employment earnings during the loss period, to accurately determine the net loss.

Trucking Company Loss Accounting

Calculating Lost Earnings in Loss of Use Trucking Claims

Written by Abigail Donahue on . Posted in Forensic Accounting, Insurance Claims Services.

When a commercial truck is out of service due to an accident, owners and operators may face significant financial losses. The inability to operate a vehicle results in lost revenue, ongoing expenses, and potential lost jobs or contracts. To recover these losses, trucking companies file loss of use claims, which seek compensation for the earnings they would have generated had the truck remained in operation. Forensic accountants can assist in these claims by accurately calculating the lost earnings based on financial records, operational data, and market trends. Their expertise ensures that businesses receive fair compensation for their losses. By examining settlement statements, analyzing alternative revenue sources, and considering seasonal factors, forensic accountants provide a comprehensive assessment of lost earnings.

The Importance of Settlement Statements in Lost Earnings Calculations
Settlement statements serve as key financial records in trucking operations. These documents detail the revenue generated by a truck, breaking down various charges, deductions, and expenses. Forensic accountants rely heavily on these statements when calculating lost earnings because they provide an accurate historical record of a truck's financial performance.

A settlement statement typically includes:

  • Freight charges
  • Fuel surcharges
  • Accessorial fees (detention time, layover pay, etc.)
  • Deductions for insurance, fuel, and maintenance

Net earnings to the owner-operator or trucking company
By analyzing multiple settlement statements before the accident, forensic accountants establish an average revenue per mile, per load, or per day. This baseline allows them to project the earnings lost during the downtime.

Additionally, forensic accountants may compare settlement statements from similar trucks in the fleet or from industry standards to further validate their calculations. If the truck was under a dedicated contract, the lost earnings might be even easier to calculate, as fixed weekly or monthly payments can be directly referenced.

Considering Alternative Revenue Sources and Mitigation Efforts
Trucking businesses often attempt to mitigate their financial losses by utilizing alternative vehicles to cover routes that would have been serviced by the disabled truck. This mitigation effort is taken into account when calculating lost earnings.

Forensic accountants assess whether:

  • The company had spare trucks available to replace the disabled unit.
  • The company leased or rented another vehicle to maintain operations.
  • Another driver or subcontractor took over the missing routes.

If a replacement vehicle was used, forensic accountants analyze whether it fully or partially offset the lost earnings. In cases where an alternative vehicle generated revenue, the loss amount may be reduced accordingly. However, if the company could not secure a replacement, the full projected loss is typically claimed.

In some cases, the mitigation process itself incurs additional costs, such as rental fees for a substitute truck or the need to pay another carrier to take over a route. Forensic accountants ensure that these costs are factored into the overall claim estimate, ensuring that trucking companies receive fair compensation for their additional expenses.

Understanding Payouts and Insurance Considerations
Insurance policies play a crucial role in loss of use claims, but the coverage varies significantly depending on the policy details. Some policies may offer compensation for:

  • Daily loss of income based on historical earnings.
  • Rental reimbursement for a substitute vehicle.
  • Partial payments that account for fixed expenses but not full revenue replacement.

Forensic accountants examine the insurance policy terms and conditions to determine the extent of coverage. They also verify whether the insurer has fairly assessed the claim and compensated for the downtime based on actual earnings and industry standards.

A common dispute in these claims arises when insurance companies offer payouts based on general estimates rather than actual financial data. Forensic accountants counter these disputes with detailed financial analysis, ensuring that the settlement accurately reflects the lost revenue.

Impact of Seasonal Factors and Market Conditions
The trucking industry experiences significant fluctuations in demand due to seasonal factors, economic conditions, and industry trends. A truck that is out of service during peak season will suffer greater financial losses than one that is down during a slower period.
Forensic accountants take these fluctuations into account by analyzing:

  • Historical revenue trends for the specific truck or fleet.
  • Industry-wide freight demand during the downtime period.
  • Market rates at the time of the loss.

For example, a truck hauling agricultural products may generate significantly higher revenue during harvest season than in the winter months. Similarly, trucking companies transporting holiday-related goods experience an increase in earnings from October to December. If a loss of use claim arises during these high-revenue periods, forensic accountants will adjust their calculations to reflect the seasonal impact.

Market conditions also play a role in revenue potential. For instance, during periods of high fuel costs, profit margins may be affected. Conversely, a shortage of available trucks due to industry-wide disruptions can drive up freight rates, increasing the lost earnings. By considering these variables, forensic accountants ensure that the calculated losses are as accurate and fair as possible.

Fixed and Variable Costs in Lost Earnings Calculations
Forensic accountants also differentiate between fixed and variable costs when calculating lost earnings.

  • Fixed costs: These are expenses that continue even when the truck is out of service, such as loan payments, insurance premiums, and licenses/permits. These costs are still incurred by the trucking company, even though no revenue is being generated.
  • Variable costs: These include fuel, maintenance, and tolls, which may decrease or stop entirely when a truck is not operating.

In loss of use claims, forensic accountants focus on net lost earnings—revenues that would have been generated minus variable costs that were temporarily discontinued. This provides a realistic and justifiable calculation for the claim.

Legal and Documentation Requirements
To support a loss of use claim, trucking companies must provide extensive documentation. Forensic accountants work closely with attorneys, insurance adjusters, and business owners to gather and analyze:

  • Settlement statements from before and after the loss.
  • Trucking contracts and rate agreements.
  • Tax returns and profit-and-loss statements.
  • Fleet utilization reports.

The stronger the documentation, the more defensible the claim becomes. Forensic accountants ensure that all calculations are backed by reliable data, reducing the likelihood of disputes from insurers or opposing parties.

Conclusion
Forensic accountants play a vital role in calculating lost earnings in loss of use trucking claims. Their expertise ensures that trucking businesses receive fair compensation for revenue lost due to unexpected vehicle downtime. By carefully analyzing settlement statements, assessing alternative revenue sources, and considering seasonal and market conditions, forensic accountants provide a detailed and justified loss calculation.

With their financial insights, trucking companies can strengthen their claims and secure the compensation necessary to offset the financial impact of downtime. Whether dealing with insurance negotiations or legal proceedings, forensic accountants provide essential support in ensuring a fair resolution to loss of use disputes.

Ride Share

New York No-Fault Insurance for Taxi, Uber, Lyft, and Ride-share Drivers

Written by Ryan Creavin on . Posted in Insurance Claims Services.

Ride Share

Currently, an estimated 90,000 taxis, Uber, Lyft, and other ride-share drivers actively operate within New York City (1). Coupled with 5,902 motor vehicle collisions reported in New York City in February 2025 alone, accidents remain a common occurrence among drivers (2). As a self-employed taxi, Uber, Lyft, or ride-share driver, accidents pose a greater sense of uncertainty and fear of financial impact as a result of being unable to work.

New York No-Fault Insurance

New York’s no-fault insurance laws are a staple of its motor vehicle insurance landscape and provide medical and financial benefit for individuals injured in car accidents—regardless of who was at fault. Thus, it is important for self-employed drivers and other individuals to maintain awareness of, and be prepared to access, key financial documents and information that may be utilized to support their claim for lost self-employment earnings.

How Are Earnings Impacted?

For self-employed drivers, earnings may be variable and fluctuate depending on demand, hours, and accommodations. Such earnings structure has many benefits but also lacks the stability and security, many salary and full-time employed individuals take for granted with a traditional paycheck. Substantiating self-employment earnings requires documentation such as personal and/or business income tax returns, IRS Form 1099s, trip logs, or earnings reporting available through the ride-share account portal. It is important for drivers to know how to access this information and understand how their earnings are being reported through annual filings of personal and/or business income tax returns.

How To Be Financially Prepared?

To attain a copy of your tax return from the IRS, inclusive of all schedules and attachments, an individual can submit a Form 4506 (3).

Fortunately, for ride-share drives operating through Uber, Lyft, and other platforms, standard and customizable reporting is readily available to users through their account in the application. Daily, weekly, or monthly earnings documents are invaluable and allow drivers to provide a record of earnings from their inception, through the loss, and to the present. In many cases, more comprehensive earnings documents will result in a more accurate calculation of lost earnings.

To access your earnings reports, open your ride-share application, navigate to your profile, and location the dashboard sections — then search for a tab pertaining to Billing, Financial, or Report. If you are unable to locate a viable tab, the Help Team or Support function within the application are a valuable resource toward locating the desired documents.

In Conclusion

One of the many benefits of New York’s no-fault insurance offers is the ability to supplement the lost earnings of self-employment individuals in the event of a motor vehicle collisions. As a self-employed driver, your chances of being involved in a collision are increased. Therefore, it is important to be knowledgeable and prepared for a situation in which you are required to provide evidence to substantiate your claim for lost self-employment earnings. It is crucial to maintain access and awareness to personal financial documents that can be utilized to your support a potential claim for lost earnings.

1 Fitzsimmons, Emma G. "They Drive for a Living and Say New York Traffic Is 'Unbelievable'." *The New York Times*, 22 July 2024, https://www.nytimes.com/2024/07/22/nyregion/street-wars-traffic-uber-taxi-new-york-city.html.
2 New York City Police Department. "Motor Vehicle Collisions." *NYC.gov*, www.nyc.gov/site/nypd/stats/traffic-data/traffic-data-collision.page. Accessed 3 Apr. 2025.
3 Internal Revenue Service. "About Form 4506, Request for Copy of Tax Return." *IRS.gov*, https://www.irs.gov/forms-pubs/about-form-4506. Accessed 3 Apr. 2025.

Personal Injury

Enhancing Personal Injury Cases

Written by Charles Amodio on . Posted in Forensic Accounting.

Personal Injury
Introduction 

Personal injury cases often involve complex financial matters that can significantly impact the outcome of a legal dispute. To navigate this intricate terrain, personal injury attorneys should consider integrating the expertise of forensic accountants into their legal teams. This collaboration can bring about a multitude of benefits, ranging from strengthening the presentation of damages to uncovering hidden financial discrepancies. In this article, we explore the reasons why personal injury attorneys should leverage the skills of forensic accountants to maximize the success of their cases.

Accurate Quantification of Damages

Personal injury cases frequently hinge on the calculation of damages suffered by the victim. Forensic accountants possess the specialized skills to meticulously assess and quantify economic losses, including medical expenses, lost wages, and future earnings. Their ability to analyze financial records and project future financial implications ensures a comprehensive and accurate estimation of the damages incurred by the plaintiff.

Uncovering Hidden Assets

In cases where the defendant may attempt to conceal assets or manipulate financial records, forensic accountants play a crucial role. Their investigative skills can uncover hidden income, undisclosed assets, or any attempts to minimize the financial responsibility of the liable party. This not only strengthens the plaintiff’s case but also ensures a fair and just compensation for the injuries sustained.

Expert Testimony and Credibility

Forensic accountants can serve as expert witnesses during trial proceedings. Their testimony adds credibility to the financial aspects of a personal injury case, helping to clarify complex financial matters for judges and juries. The ability to present clear and concise financial evidence can be a game-changer, influencing the decision-making process in favor of the injured party.

Mitigating Fraud and Exaggerated Claims

Unfortunately, personal injury cases are not immune to fraudulent or exaggerated claims. Forensic accountants can scrutinize financial records to detect inconsistencies, exaggerations, or attempts to defraud the legal system. By ensuring the accuracy of financial information, forensic accountants contribute to maintaining the integrity of the legal process.

Strategic Settlement Negotiations

Forensic accountants provide personal injury attorneys with valuable insights during settlement negotiations. Their expertise allows attorneys to assess the financial implications of different settlement offers, helping them make informed decisions that align with the best interests of their clients. This strategic advantage can lead to more favorable settlements and resolutions.

Conclusion

Incorporating forensic accountants into personal injury cases is a strategic move that can significantly enhance the overall effectiveness of legal representation. Their ability to unravel complex financial details, provide expert testimony, and contribute to strategic decision-making positions personal injury attorneys for success. By recognizing the pivotal role of forensic accountants, attorneys can build stronger cases, achieve more equitable settlements, and ultimately deliver justice for their injured clients.

Elder Fraud Awareness and Prevention

Written by Megan Kelly on . Posted in Financial Investigations and Fraud Prevention, Forensic Accounting.

According to the FBI’s Internet Crime Complaint Center’s (IC3) 2023 Elder Fraud Report, frauds targeting individuals aged 60 and above resulted in over $3.4 billion in losses in 2023. This represented an increase of nearly 11% from 2022. Older adults are a frequent target of scammers as they tend to be perceived as more vulnerable, trusting, less technologically savvy, and tend to have considerable funds saved for retirement. Additionally, elder fraud frequently goes unreported due to shame associated with falling victim to the scam.

Per the IC3’s 2023 Elder Fraud Report, the following are the top 5 most frequently reported frauds to the IC3 related to elder fraud:

• Tech support fraud – This is a type of scam where a fraudster pretends to oTer technical support services, posing as a legitimate company like Microsoft. In many circumstances, these individuals will use technical terms to make it appear as if there are legitimate issues with your personal computer. They will then ask to gain remote access to your device, allowing them to install malware on your device, giving them access to sensitive data. In 2023, total reported losses were nearly $600 million.

• Personal data breach – A personal data breach occurs when there is an unauthorized or accidental security breach that results in the loss or access to personal data. This can include sending personal data to the incorrect recipient, whether accidentally or unknowingly through a phishing scam, or theft of a device that contains personal identifiable information.

• Romance scams – Per the FBI, in a romance scam, a criminal uses a fake online identity to gain a victim’s affection and trust, then uses the nature of their “relationship” to manipulate and ultimately steal money from the victim. Fraudsters prey on individuals searching for a human connection, and gain access to their personally identifiable information, or convince the individual to send them money directly. In 2023, total reported losses were over $350 million.

• Non-payment/Non-delivery scams – In a non-delivery scam, an individual makes a purchase online, typically sparked by the offer of a deep discount from a website that may be lesser known. The purchased product is then never delivered, and the “seller” of the product is unreachable. This is a scam to especially be aware of as we are entering the holiday season.

• Investment scams – In an investment scam, a fraudster promises guaranteed high returns with minimal risk in a fake investment opportunity. Scammers create websites and other informational materials that appear legitimate, and often use language indicating that the opportunity is limited and a sense of pressure is created around making the investment. Seniors are frequently targeted in these types of schemes as these individuals typically have retirement funds available for investing. Recently, these schemes have involved cryptocurrency investment opportunities. In 2023 alone, reported losses to the IC3 were over $1 billion.

There are several warnings signs to be aware of that could indicate that someone in your life has become a victim of a fraud scheme. Some things to be aware of include:

• Mood changes or heightened levels of stress.
• Abnormal spending behavior.
• Sudden changes in any estate-related documents.
• Excitement related to a new investment opportunity that deviates from that individual’s typical investment strategies.
• Mention of any new people in the individual’s life.

Prevention

With the continued advancements in technology, it is more important than ever to be vigilant in not only personal fraud prevention, but being able to identify and communicate this information to protect your older friends and family members.

The following are some steps to take to avoid the scams noted above:

• Do not respond to calls or texts from unknown numbers.
• Never give remote access to your computer to an individual who contacts you unexpectedly.
• Do not send money to someone you have never met in person.
• Never click on links or attachments in any unsolicited e-mails or text messages.
• Do not share your personal identifiable information with an unknown individual, especially via e-mail or text message.
• Be aware of where you are doing your online shopping – if you’re making a purchase at a new website, do some research before clicking purchase.
• Seek advice from a trusted financial advisor before making any investment decisions.
• Never make an investment decision when pressure is involved.
• Frequently monitor your credit score and report any potential fraud to your credit agency.

If you think that you or someone you know may have been a victim of fraud, it is important to contact law enforcement immediately. Additionally, you can file a complaint with the FBI’s Internet Crime Complaint Center.

Top Ten Financial Mistakes People Make When Getting Divorced

Written by David E. Consigli on . Posted in Business Valuations for Advisory, Forensic Accounting.

The divorce process can be stressful. People will often make mistakes when it comes to financial matters that can have lifetime consequences in the divorce process. We outline the top ten financial mistakes people make during a divorce.

  1. Not educating themselves on the finances – sometimes one spouse manages all the finances, and the other spouse is completely in the dark. This becomes problematic and stressful for the non-financial spouse. It is imperative that the spouse not managing the finances educates themselves on financial matters. This is often done by hiring a Certified Divorce Financial Analyst who can help prepare income and expense analysis before, during, and after the pending divorce.
  2. Treating all assets the same – The fact of the matter is that not all assets are the same. Some assets have tax consequences. For example, if you split all your assets 50/50 and some have tax consequences, then you will not get a 50/50 split. It is important to consult a tax advisor when splitting assets.
  3. Not updating financial documents – All your financial documents need to be updated, including beneficiaries on life insurance policies, annuities, and other financial documents. Make sure these designations reflect your post-divorce wishes.
  4. Not accurately accounting for expenses – Life after divorce may look much different than before. People often underestimate their operating expenses going forward and therefore may have trouble meeting them. There will be many changes and people often overlook housing and healthcare expenses and other lifestyle changes.
  5. Getting rid of joint debt – Make you consolidate and get rid of any joint debt. If payments are made accidentally or on purpose, this could cause credit problems down the road. Clear planning and making sure these debts are paid is crucial to reflect post-divorce credit worthiness.
  6. Not having assets appraised – Some couples have an interest in business, expensive artwork or jewelry and never have it appraised. Especially small businesses. There are professionals who value these items and are experts in their field.
  7. Not searching for hidden assets – spouses sometimes have trusts, overseas accounts, or transfer assets to family and/or friends. Forensic accountants can assist in finding these hidden assets.
  8. Not properly allocating marital assets – When couples divorce, they go from being one household to two households. The asset split much be fair to each spouse in both the terms of cash flow today and retirement assets tomorrow. Having too much of one or the other can cause financial hardship.
  9. Ignoring credit – establishing individual credit is important, especially after divorce, if you plan to buy a house or a car and have no credit
  10. Not using professionals – There are numerous financial professionals who can assist through the maze of financial implications in a divorce. These professionals can be hired by either side or can be hired by both couples as a joint expert. The money spent on peace of mind is worth it.

Each divorce is unique as is each financial situation. Divorce is a financial break up also, not planning and not seeking financial advice from an expert can be a financial disaster. Financial decisions should not be made on emotion but should be well thought out with the assistance of a financial and tax expert.

The Impact of an Up-to-Date Buy-Sell Agreement

Written by Emma French on . Posted in Business Valuation, Business Valuations for Advisory, Forensic Accounting.

Regularly updating your Company’s buy-sell agreement is an essential way to plan for unexpected business events. Buy-sell agreements are binding contracts that outline when owners can sell their interest, who can buy the interest, how the business will be valued, along with numerous other specifications. To read more about the importance of an up-to-date agreement, see FAZ Forensics article published on November 2, 2023 via the following link: FAZ Forensics: The Importance of an Up-to-Date Buy-Sell Agreement.

Company shareholders[1] operating without an up-to-date buy-sell agreement expose themselves to unnecessary financial risk. These agreements help shareholders remain shielded from overpaying for a partners’ interest, receiving under market value payment for their own interest, allowing their interest to be at-risk for another partners’ bankruptcy, and much more. The below scenario puts the financial risk into perspective:

On January 1, 2010, Partners X, Y, and Z formed ABC Rentals, LLC as equal partners. ABC Rentals, LLC operates as a real estate holding company for the residential properties purchased, improved/refinished, and rented. A fixed price buy-sell agreement was created and dated January 15, 2010.

Between 2010 and 2015, ABC Rentals, LLC purchased and refinished only 3 properties, recovering from poor market conditions and low cash flow. Assuming the business value increased since inception, the Partners decided to update their fixed price buy-sell agreement as of December 31, 2015. The valuation of ABC Rentals, LLC was determined to be $450,000.

As the market began to increase in 2015, the Partners decided to increase their portfolio property count and expand the business operations. Within the next six years to 2021, ABC Rentals, LLC purchased, renovated, and occupied 15 additional rental properties, all of which remain in good standing.

In 2021, Partner Y unexpectedly passed away.

As Partners X and Z gathered necessary information regarding Partner Y’s ownership value in ABC Rentals, LLC, they recovered the Company’s buy-sell agreement, dated December 31, 2015. According to the buy-sell agreement, the Company’s value remains $450,000. Partner Y’s family is entitled to $150,000 (one-third ownership interest).

Given the Company increased their property portfolio from three residential rental properties to eighteen with high profitability and cash flow margins, along with the inflated residential real estate market impacts, the Company would likely be worth closer to $3 million. If an updated buy-sell agreement was completed closer to the present day, Partner Y’s family would be entitled to nearly $1 million.

In a time of heartbreak and need, Partner Y’s family faces a loss of $850,000 for his/her ownership interest in ABC Rentals, LLC.

Companies inevitably become more or less valuable as operations evolve over time. To protect yourself, your business partners, and your family from paying or receiving an amount inequivalent to the fair market value, investing time into regularly updating your buy-sell agreement is crucial. As a shareholder – if your business partners and family members are important to you, your buy-sell agreement should be, too.

[1] Note: The term “shareholders” is used to represent shareholders, stockholders, partners, and owners.

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