Forensic Accounting Projects

FBK does not disclose the names of our clients due to confidentiality.

Tax Disputes

In an arbitration trial, FBK’s experts examined the financial flows of one of the largest foreign companies operating in Russia to ascertain the validity of claims brought by tax authorities against the company. After analyzing millions of transactions, our experts ascertained that the company had attracted loan funds for its business operations or for transfer as loan to counterparties. Our experts were called to give their opinion and assist the court in upholding or disproving the validity of minimizing the profits tax base by the amount of interest charged on the loan. The experts carried out an economic and mathematical analysis and proved that the company had been right in classifying its payment for loan funds as expenditures incurred.

In a tax trial, the authorities found commission contracts to be sham, classified them as purchase-sale transactions and assessed additional taxes by vastly increasing the amount due. FBK’s experts conducted an examination of the transactions and calculated different schemes of corporate operations which showed that under certain accounting policies, the taxpayer had been able to arrange its activity under purchase-sale contracts with the same tax effects as under commission contracts with counterparties. Our experts thus proved that the taxpayer had not used commission contracts to conceal taxes and also provided a detailed civil determination of transactions, which also proved the adequacy of actual legal effects on the terms of commission contracts.

FBK’s experts participated in a suit between one of the largest Russian oil and gas companies and the tax authorities. The subject of the suit was the minimization of the profits tax base on the value of technological equipment repairs. Tax authorities insisted that the company accounted for a unit that had been substituted with a similar one during repairs as a separate inventory item and subsequently depreciated it. FBK’s experts did not agree with the arguments put forward by the tax authorities and, given the ambiguity and inconsistency of accounting legislation, coordinated their opposing position with Russia’s Ministry of Finance, according to which the value of parts replaced during repairs should be recognized as one-off expenditures.

Civil Litigations

An oil and gas company brought a claim against Rosreserve for the recovery of spending incurred by the plaintiff for the storage of the state reserve in the form of oil products. The appeal court agreed with the plaintiff’s legal claims for adequate recovery of his expenditures on ensuring the state reserve and suggested that the court of first instance should examine the question of an expert report on the documentation produced by the plaintiff to support his expenditures. With consent of both parties, the court instructed FBK to examine the document, whereupon the court upheld the claim.

Criminal Cases

The manager of a construction company was incriminated in inflicting damage to a subsidiary through the illegal recovery of the parent company’s debt to the subsidiary. However, FBK’s experts conducted an examination and found out that the indebtedness had arisen because of the “transfer of additional capital to the subsidiary”. The parties to the trial (including the prisoners at the bar) were surprised to learn that additional capital was not an object of civil rights and could not therefore be transferred and give rise to indebtedness, thus negating both the damage and the crime.

The defense involved FBK’s employee in the trial to be interrogated as a bookkeeping/finance expert witness in criminal proceedings where a top manager of one of the largest international companies was a defendant. The defendant was incriminated in a number of crimes, including the theft of corporate property under Article 160 of Russia’s Criminal Code. The prosecution considered that the theft had been committed in the form of an illegal transfer of the company’s property at some understated value to pay the charter capital of subsidiaries and in violation of Russia’s federal law “On joint-stock companies”. FBK’s experts carried out a forensic accounting investigation and proved that the property had been transferred at fair value. The court ruled the property valuation valid with no violations of the legislation in force.

The prosecution closed a criminal case against the former director of a state-run unitary enterprise. The prisoner at the bar was incriminated under Article 160 “Theft or Misappropriation” of Russia’s Criminal Code. For the defense, FBK’s experts carried out a forensic economic examination and proved that the decisions made by management in striking deals with counterparties had been economically justified and no damage had been inflicted on the enterprise, whereupon the court dismissed the case.

In hearing a criminal case brought by Russia’s Federal Security Service against a scientist under Article 160 “Theft or Misappropriation” of Russia’s Criminal Code, the Supreme Court interrogated FBK’s expert accountant as a witness. Our expert drew the court’s attention to the inadequacy of conclusions drawn by the prosecution’s expert witness and the absence of evidence of the damage allegedly caused by the defendant’s actions.

Forensic Accounting Services