News & Insights

Capstone is a team of experts with extensive forensic accounting experience. In order to provide our clients with the highest level of service, especially with aggressive timelines and at the most cost competitive rates, we apply the best software and tools for each engagement. One such tool, Valid8 Financial Software (“Valid8”), is especially helpful for accelerating our process of bank and credit card statement analysis. Valid8 provides many benefits to our clients, but the most ...

In the 1950’s in a dissertation at Indiana University, Donald R. Cressey and Edwin H. Sutherland first proposed the idea of what is now infamously known as The Fraud Triangle. Cressey was interviewing embezzlers, who he referred to as “trust violators”, trying to understand the circumstances that led them to first breaking that trust. His final hypothesis was condensed down to the three elements that he believed must be present for fraud to occur: Motivation, ...

By Rob Sanders, CFA, CFE Companies control and benefit from assets. The assets are financed through advances of debt (borrowing) or equity (owner contributions).[1] Disputes can arise as to the character of a transaction as debt or equity, requiring a comprehensive analysis to resolve. Why does it matter whether a transaction is debt or equity? Reasons include differences in tax treatment, priority of claim in bankruptcy, and level of control in the company. When we ...

The dictionary defines solvency as “the ability to pay all the money that is owed”. Specific definitions exist in various contexts. A trained financial expert can prepare an analysis (“solvency analysis”) to reach a conclusion of solvency suitable for the context. Solvency analyses support claims in litigation in state or federal court, or in adversary proceedings (bankruptcy court). Party A accuses Party B of transferring property with the intent to or effect of putting the ...

As businesses grow and get more complex, so does the size of their data. Businesses often maintain their data on systems such as SAP, Oracle or their own proprietary software. This data is important in the discovery process, and it is becoming more common for parties in litigation to produce electronic data sets containing hundreds of thousands, to even millions of rows. The large size of these data sets often leads to concerns that the ...

In a stunning collapse reminiscent of Enron, the cryptocurrency exchange FTX, once valued at $32 billion, filed for Chapter 11 bankruptcy on November 17, 2022. The newly appointed CEO, who authorized the Chapter 11 filing and is tasked with maximizing value to FTX’s creditors, was also involved in Enron’s restructuring. And yet, he testified that “never in my career have I seen such an utter failure of corporate controls at every level of an organization, ...

Capstone Forensic Group LLC is pleased to announce that Rob Sanders and Jeff Davidson recently became certified as Accredited Petroleum Accountants (APA®) by the Council of Petroleum Accountants Societies (COPAS). COPAS is a professional member association for the industry’s most knowledgeable and influential petroleum accountants. “We are excited to join this distinguished group of accountants and look forward to continue successfully serving our clients in the oil & gas industry,” said Rob and Jeff. Rob and ...

Companies control and benefit from assets. The assets are financed through advances of debt (borrowing) or equity (owner contributions).[1] Disputes can arise as to the character of a transaction as debt or equity, requiring a comprehensive analysis to resolve. Why does it matter whether a transaction is debt or equity? Reasons include differences in tax treatment, priority of claim in bankruptcy, and level of control in the company. When we are asked to help with ...

Starting June 1, 2022, Capstone Forensic Group is officially open for business. Founded by former Compton & Wendler, P.C. employees, Capstone will continue to provide you with the same high quality of service you have come to know from working with our talented set of professionals. Capstone provides a full suite of forensic accounting, litigation support, fraud investigation, and business valuation services. We help our clients by analyzing the numbers and facts, then taking what ...

We often receive questions about how to categorize a financial item. For example, is a royalty fee to a licensor considered revenue? What about the related obligation of the licensee to pay the royalty fee? We find the answers in the correct definitions of accounting terms. For example, the Financial Accounting Standards Board (FASB) provides guidance for US GAAP. To do so, FASB uses Concept Statements.[1] Concept Statement No. 6 includes many useful, basic definitions, ...

Tracing funds through bank accounts is a complicated exercise, requiring a funds flow assumption. Typically, those commingling their own funds with those not belonging to them are considered to have spent their own funds first, and only then to have begun spending the funds not belonging to them. This is known as the ‘lowest intermediate balance rule.’ Take a look at the graphic below to see how this might look in action. For example, assume ...

By Lorène Becker June 15, 2020 As businesses grow and get more complex, so does the size of their data. Businesses often maintain their data on systems such as SAP, Oracle or their own proprietary software. This data is important in the discovery process but it is becoming more common for parties in litigation to produce electronic data sets containing hundreds of thousands, to even millions of rows. The large size of these data sets ...

By Ginny Christie June 4, 2020 Our perceptions of reality have been literally and figuratively altered in the digital age. Increasingly, software becomes available to manipulate images. Now, software exists from multiple vendors to alter bank statements with startling facsimile to the original statements.  This regrettably encourages wrongdoers and frustrates detection of fraudulent transactions. If the credibility of the entity or individual providing electronic or printed bank statements becomes suspect, go to the bank for ...