What Information Does a Forensic Accountant Actually Need to Assess Economic Loss?
- DB Forensic
- 4 days ago
- 3 min read
One of the most common sources of delay in personal injury and family law matters is incomplete financial information. A forensic accountant cannot produce an accurate economic loss report without the right documents, and gathering those documents after the fact can take considerable time.
Understanding what a forensic accountant actually needs, and why each piece of information matters, helps legal teams and their clients prepare more effectively and avoid unnecessary delays.
It Depends on the Nature of the Claim
The information required will differ depending on whether the plaintiff is an employee, a business owner, or a relative claiming following the death of a family member.
In each case, the forensic accountant needs a sufficient financial history to establish what the plaintiff earned before the relevant event, how that has been affected, and how the loss is likely to continue into the future.
As a general principle, records covering four full financial years prior to the event, and up to the present date, are the typical starting point.
For Employed Individuals
Where the plaintiff was employed at the time of their injury, the key documents typically required include:
Personal income tax returns and notices of assessment
Curriculum vitae or employment history
Details of the employment position before and after the event, including gross weekly wages, ordinary time earnings, overtime, allowances, and hours worked
Confirmation of earnings from the employer
Details of the applicable industrial award or enterprise agreement
Information about career intentions, including any expected promotions or changes in role
Superannuation statements, both before and after the event, showing employer contributions and fund balance
Without this information, it is not possible to accurately establish what the plaintiff was earning before the injury, what they are earning now, and how the gap between those two figures should be assessed going forward.
For Business Owners and Self-Employed Individuals
Where the plaintiff owned or operated a business, the financial analysis is considerably more complex.
The documents typically required include:
Business income tax returns, including detailed profit and loss statements, balance sheets, and depreciation schedules
Business activity statements
The personal income tax returns of the plaintiff and, where relevant, their spouse
Business structure documentation, including details of directors, shareholders, and any related entities
Detailed financial statements for the entity
Records relevant to the specific type of claim, which may include gross income records such as invoices, bank statements, general ledger records, wage records, PAYG statements, superannuation records, lease agreements, minute books, management accounts, and appointment books
For business owners, the objective is to understand what the business was generating before the event, what it is generating now, and how the plaintiff's income has been affected. This often requires reconstructing financial performance and normalising the accounts to remove any non-recurring or unusual items.
For Compensation to Relatives Claims
Where a claim is being made by dependants following the death of a worker, additional information is needed.
In addition to the financial records relevant to the deceased's employment or business activities, the following is typically required for the two to three years before the death:
Names and dates of birth of the spouse, children, and other dependants
Details of whether the spouse or dependants were involved in the business
Detailed and itemised household expenditure and saving patterns
The individual expenditure and saving patterns of the deceased
This information allows the forensic accountant to determine how much of the deceased's income was available for the support of dependants, as distinct from the deceased's own personal expenditure.
Why Complete Records Matter
The quality of the forensic accountant's report is directly tied to the quality of the information provided. Where records are incomplete, the expert may need to make assumptions or reconstructions that introduce greater uncertainty into the analysis.
In contested matters, this can provide the opposing party with grounds to challenge the report.
At DB Forensic, we provide clear guidance on the information required at the outset of each engagement so that the document collection process is as efficient as possible.
Getting the Information Right From the Start
If you are instructing a forensic accountant for the first time and want to understand what documents to gather, DB Forensic can provide a tailored information request suited to the specific nature of the claim.
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