Upon divorce, the court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage. This includes both community property and separate property. A forensic accountant's findings can influence what the court considers 'just and right' by revealing hidden assets or financial discrepancies.
If a spouse has disposed of any community property with the intent to defraud the other spouse or the estate, the court may reconstitute the community estate to include the fraudulently disposed of property. The court may also order a division of the reconstituted estate in a manner that the court deems just and right. Forensic accountants play a crucial role in uncovering such fraudulent activities.
A marriage may be annulled if one party used fraud, duress, or force to induce the other party to enter into the marriage, and the other party has not voluntarily cohabited with the party since learning of the fraud or being released from the duress or force. Financial fraud discovered by a forensic accountant could potentially be grounds for annulment if it influenced the decision to marry.
A court may grant a judgment to a spouse against the other spouse if the other spouse has committed actual or constructive fraud on the community. The judgment awarded may include the value of the reconstituted estate, which can be significantly impacted by a forensic accountant's findings of hidden or undisclosed assets.
The court may provide for the division of future property, including income, bonuses, and property to be acquired after the divorce, in a manner that the court deems just and right. Forensic accountants may uncover future financial interests or expected assets that should be considered in the division.
Spouses may enter into a written agreement concerning the division of the property and the liabilities of the spouses and maintenance of either spouse. The agreement is binding on the court unless it finds the agreement to be unconscionable. A forensic accountant's report can provide the necessary financial clarity to ensure the agreement is fair and equitable.
The Bank Secrecy Act mandates that financial institutions in the United States help government agencies to detect and prevent money laundering. Specifically, the act requires financial institutions to keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000 (daily aggregate amount), and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities. Forensic accountants may use the records and reports generated in compliance with the BSA to trace financial transactions and uncover hidden assets or financial manipulations.
The Internal Revenue Code is the domestic portion of federal statutory tax law in the United States. It covers the rules for federal income tax, payroll taxes, estate taxes, gift taxes, and excise taxes. Forensic accountants may analyze personal and business tax returns to detect fraud or manipulation by comparing reported income and deductions with other financial records. Discrepancies may indicate hidden assets or unreported income, which can be critical in divorce litigation for determining the correct division of assets and appropriate support payments.
The Sarbanes-Oxley Act was enacted in response to a number of major corporate and accounting scandals. It established new or enhanced standards for all U.S. public company boards, management, and public accounting firms. The act contains provisions relating to auditor independence, corporate governance, internal control assessment, and enhanced financial disclosure. While primarily focused on publicly traded companies, the principles and requirements of the Sarbanes-Oxley Act may provide a framework for forensic accountants when examining the financial records of private entities in divorce cases to ensure the accuracy and completeness of financial disclosures.
The Fair Credit Reporting Act is a federal law that promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. It is designed to protect consumers from the willful and/or negligent inclusion of inaccurate information in their credit reports. Forensic accountants may use credit reports to trace financial transactions and liabilities, which can reveal hidden assets or undisclosed debts in a divorce proceeding. The FCRA also provides guidelines on the use of credit information for employment, which may be relevant in assessing a spouse's income and financial standing.
The Money Laundering Control Act makes it illegal to engage in transactions with proceeds generated from certain specified unlawful activities. The act prohibits individuals from engaging in practices designed to conceal the origin of money derived from illegal activities or to avoid reporting requirements under the BSA. Forensic accountants may use the provisions of this act to identify and trace suspicious financial transactions that could be related to money laundering, which may also involve the concealment of assets in the context of divorce litigation.