A large chemicals conglomerate was accused of smoothing out its earnings over a several year period by adjusting reserves at one of its subsidiaries. It was alleged that the reserves were not adequately disclosed in the company’s SEC filings. MSG was retained to investigate the nature of the reserves and the adjustments made to the reserve accounts over time and to assess the adequacy of the disclosures regarding the reserves in the company’s public filings.
An operator of acute care hospitals was alleged to have inappropriately reported revenues over the course of a couple of years. The plaintiffs sought damages from the auditing firm, alleging the accounting firm assisted with the issuance of improper financial statements. MSG investigated the revenue recognition policy of the company and assessed its impact on the company’s earnings. We also determined the standard of revenue reporting utilized by other firms competing in the same marketplace.
After falling victim to a large Ponzi scheme, an office equipment leasing company filed for bankruptcy. The bankruptcy trustee filed charges against the company’s independent accountants, a legal adviser, and an insurer, seeking damages. MSG was retained to conduct a comprehensive forensic accounting investigation and to quantify damages, if any. The analysis also included a reconstruction of the company’s financial statements.
The owner of a private medical center located in Asia and the operator of the center disagreed about the methodology utilized to calculate incentive fee payments to the operator. The incentive fees earned by the operator were based on operating income, as calculated by U.S. GAAP. Whereas the operator alleged the gain on disposal of an old hospital should be included in operating income, the medical center believed it should be excluded. MSG was engaged to analyze the accounting issues and to determine the correct treatment of the gain.
An operator of drug stores agreed to acquire another retailer’s drug store operations. The purchase price was established as the tangible book value of assets. Included in the accounting records for fixed assets were intangible assets such as goodwill. Following the closing of the transaction, the acquirer sued for damages resulting from an alleged overpayment due to inaccuracies in the fixed asset register. MSG was retained to determine the appropriateness of the disclosure of tangible versus intangible assets as well as to opine on the definition of fixed assets.
Upon the advice of its outside auditors, a provider of Internet services hired an accounting consultant to act as its interim Chief Financial Officer. The acting CFO then allegedly assisted the Chief Executive Officer in preparing fraudulent financial statements, and in embezzling funds. Working with one of our senior experts, MSG analyzed the duties and tasks that the consultant performed as compared to those duties expected of a CFO.
A food and drug retailer entered into four synthetic leases with a developer of four separate distribution centers. MSG evaluated whether the synthetic lease transactions were reasonably classified as real estate leases or were financing instruments designed for the primary benefit of the retailer (tenant). We assessed whether the leases satisfied a reasonable balance of the rights, obligations, burdens, and benefits typical of a normal commercial real estate lease and whether the leases were sufficiently well crafted to meet FASB 13 operating lease criteria.
A publicly-traded provider of human resource software acquired certain assets of a publicly-traded Internet company. The purchase price consisted of cash and restricted shares of the acquirer’s common stock. The acquirer was required to determine the value of the consideration in order to report the transaction on its books. MSG was engaged to determine the lack of marketability discount to be applied to the restricted shares for the purpose of determining the total purchase price. This analysis was performed to substantiate the recording of the transaction as reported in the acquirer’s filings with the Securities and Exchange Commission (SEC).