Invaluable Service of Forensic Accountant
Recently, during a regional seminar on forensic accounting, some of the accountants expressed their doubts about the role of Forensic Accountants in the assessment of the various types of insurance claims, and especially a business interruption claim. However, based on my experience, any dispute stemming from a business interruption claim is rare if good forensic accountants are involved. Their involvement at a very early stage of the claim has resulted in the settlement of claim at an exceptionally fast pace which is economically beneficial for the insurer and the insured.
The value derived from the forensic accountant’s technical knowledge of accounting, familiarity with claim processes and ability to examine facts at a micro level, generally result in a more expeditious resolution to the Loss of Profit claim (LOP) and/or material damage claim whether it has resulted on account of breakdown of machineries, fire or any other reasons covered by the policy.
In an interesting case, a big super market’s ground floor was fully submerged in water due to an unexpected flood at Kota Tinggi, Johor. The loss of the insured property was estimated to be more than RM 2,500,000 and loss of business income during the indemnity period was approximately RM 700,000. Since the owner had never experienced this type of situation despite having been in the business for quite a while, they decided to engage a forensic accountant even before the water had fully receded from the super market. The Forensic accountant went inside the premises along with the adjusters to understand the value and extent of damages. During the inspection, the Forensic accountant asked his subordinates to randomly pick up more than 50 items covered in the mud and silt left after the flood. After getting these items cleaned with fresh water, he took note of the the bar codes of all these items. With the consent of the adjusters, these items were jointly sealed...
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