Robert A. Bonavito, CPA

Benford’s Law

2020-10-14 09:02:44

Benford’s Law As a forensic accountant I have many ways and techniques to spot fraud. One of the ways to detect fraud, especially when analyzing tax returns, general ledgers and other items that contain a large amount of numerical data is by applying Benford’s Law. Benford’s Law states that any random numbers will have a specific result as to which digits appear first in each data set. The law gives a prediction of frequency of leading digits using base-10 logarithms. The below chart shows what you would expect to find if the information you analyze is indeed random and not somehow altered. When you analyze data you would expect to see the first digit in the data to be a one about 30% of the time, expect a two to be the first digit in the data about 17.6% of the time. When analyzing large data sets it is easy to spot anomalies that tip us off that there is a high probability that the numbers have been manipulated. From there we perform forensic accounting techniques in order to establish fraud. This is one of those techniques that is hard to understand unless we actually go through an example. This video is being made in the time of COVID-19 and there are some concerns about the cases reported to the Centers for Disease Control and Prevention “CDC”. I am going to perform a Benford’s Law test on the data. The first thing I am going to do is go to the CDC website: https://www.cdc.gov/coronavirus/2019-ncov/index.html From there I am going to download cases by date and state territory. This should give me the total cases per state through today’s date. I will fix the data and then I will use an Excel formula to segregate the data based on the first digit that appears. =LEFT(B2,1) =COUNTIFS ($C$2: $C$61, D2) Once I have this, I am going to then look at it from a percentage standpoint, graph it and compare it to what it should look like as noted above. This analysis is telling me that the data is not random and there is a high likelihood of fraud. You can see that the bar chart does not have an even downward slope as expected.

Hedge Funds

2020-09-15 16:12:52

Hedge Funds Based on the book More Money Than God, and a Hedge Fund course I took at Harvard University and my own experiences. Hedge funds have fascinated people for the last three decades. Question is, what is a hedge fund, how do they work and who runs them? Goals of hedge funds Reduce volatility Use correlation Reduce drawdowns Manage distributions of returns Hedge funds are built on the premise that the markets are not efficient; this goes directly against the Efficient Market Hypothesis “EMH”. Hedge funds are able to implement a variety of strategies that prove EMH is false. Hedge funds are able to increase returns at lower risk than the market. These strategies include the following: Long short-this involves taking long and short positions in investment. Relative value-this is a market neutral strategy that takes advantage of mispricing between investments. Event driven strategies-events such as mergers and acquisitions can present opportunities for investment when there is a perceived mismatch between the purchase price and the agreed upon price. Tactical trading-this strategy is meant to take advantage of global macro trends, interest rates and currencies (Connor, 2018). Do Hedge Funds work? The goal of a hedge fund is to earn above-average market returns called alpha. For example, the S&P 500 fund is earning 15% so you would expect hedge funds to earn 20% to 25%. You would expect them to do this with little or no additional risk. Some of the giants in the hedge fund industry are: Alfred Winslow Jones “Jones”, the father of hedge funds My favorite personality in the hedge fund industry is Alfred Winslow Jones. Jones is commonly referred to as the father of hedge funds. He was in his 40’s when he started his hedge fund, which is considered late. He also had an unorthodox background which included journalism and other non-finance related jobs. Though he started late in life, before computers and advance analysis platforms, many of his initial hedge fund practices are still used to this day (Mallaby, 2010). Jones is most famous for his shorting stocks in order to hedge risk. When he started his fund in 1949 Wall Street was a different world. It was full of bankers that enjoyed the “fluffy life”, little work for guaranteed paychecks. Jones had many breakthroughs that helped him thrive in the 50’s and 60’s, a time when the market was steadily rising. Some of his main breakthroughs are as follows: He set up a partnership investment company so that he could avoid regulation from the Fed and only let well-heeled investors into the fund. This not only kept bureaucrats and regulations at an all-time low but also made sure he had plenty of capital (investors withdrawals were limited) which he could rely on consistently. He also set up a competitive system in which stockbrokers would be paid for leads that performed. At the time this was new for Wall Street. This ensured that he would get analysts’ recommendations for the stocks they thought were going to increase in value and those that were heading into trouble. Because he had long, and short positions Jones could make money on both good and bad companies. Operating as a partnership allowed Jones to set up a unique arrangement with investors. He had a small fee at 1% to cover overhead and a 20% charge he would earn if the investments performed well. He was also the first to use beta ratios to balance risk, leverage and risk parity concepts and alpha calculations. In Exhibit A you can see how he utilized the long short strategy to make above-average profits. In the first scenario, stocks drop by 10% but Jones only lost 5% of capital while the traditional investors lost over 6%. In the second scenario, Jones only lost 15% when the traditional investor lost over 20% (Mallaby, 2010). Jones was very successful during his fund's history mainly because he was a maverick and started the hedge fund industry utilizing unique and groundbreaking management techniques that consistently outperformed the market. George Soros, theory of reflexivity Stanley Druckenmiller Julian Robertson, value manager Momentum of Dot Com bust Paul Tudor Jones, set up a script-based theory Example of a hedge fund strategy 10 Hour Rule-Time I take to become good at something This strategy was originally started by Jones who opened the first hedge fund in 1949. My favorite strategy is long short strategy because I feel that it enables you to take advantage of proprietary information. Long short strategies can help in many of situations, but mainly I like its ability to separate individual stock risk from market risk (ResearchGate, 2014). The three main types of long short strategies are as follows (ResearchGate, 2014): Equity Market Neutral Strategy Equity Long Short Dedicated Short Bias The Equity Market Neutral Strategy allows you to isolate and separate risk. If you want to separate market risk from a company you can short the S&P 500 and long that company (ResearchGate, 2014). This strategy is very effective when the investor manager has the ability to find over and undervalued companies. By eliminating the market risk and shorting overvalued investments and going long on undervalued investments, the investor will have the ability to earn Portable Alpha. The Equity Market Neutral Strategy is particularly applicable to investing in emerging market companies in risky foreign markets. An investor can isolate the stock market or the sovereign currency risk by shorting those risks they do not want. For example, in Exhibit C you can see that I have classified the various risk that a foreign stock would have in an emerging markets economy (Marber, 2020). In this pyramid I have listed all the types of risk premiums you would encounter if you were investing in an emerging market company. By realizing the different types of risk, you would be able to hedge those risks that you did not want. If you did not want FX Emerging Market Risk Premium you could hedge that away. In this way that risk would not affect the EM company you were buying (Marber, 2020). The Equity Long Short method is similar to the Equity Market Neutral Strategy, except you are not hedging away the overall market risk. The Equity Long Short method can be utilized in Pair Trading. With this strategy you have two similar stocks with different betas and allocate capital based on the ratio. On the following page you can see how you would use the hedge ratio. In Exhibit A I have provided an example of how the long short strategy would be implemented utilizing two scenarios. From this exhibit you can see that the long short strategy has many advantages over traditional investing. Another example would be if you believe that online retail is going to continue to outperform the brick and mortar stores. If you thought that Amazon and Chewy were going to outperform Sears and PetSmart you may want to go long on Amazon and Chewy and short on Sears and PetSmart. It is interesting to note that there is an ETF called CLIX that implements this strategy. Dedicated Short Bias relies on the fact that the vast majority of people go long on stocks. Therefore, in a declining market the shorts will far outperform those who have a long bias. By concentrating solely on shorts, you would be contrary to the vast majority of other investors.

IRS Audits

2020-07-01 09:25:22

Let’s face it, most people get very nervous when they receive an audit notice. Typically, they will try to handle it themselves, use their accountant or one of the many scam tax services. The question is why someone would want to use a forensic accountant for a tax audit. You would be surprised how many audits we have been involved with, both at the IRS and state level. Last year our firm was contacted by a law firm to look over a fraud audit. The audit involved a gentleman in his early 80’s. Apparently, he was going through a very contentious divorce ten years back, when his future ex-wife produced records; a second set of books for one of his businesses. This eventually resulted in an IRS audit. Based on these records, the IRS was alleging that over two million dollars in taxes were underpaid over multiple years. At this point the client brought in a high-powered legal team and accountants to help fight the audit. Eventually it came down to the advice of his attorney saying he should settle the audit, or he could risk going to jail. On the advice of his attorneys he settled the audit and admitted to underreporting income. Several years later another law firm met with him and asked us to take a look at the so-called second set of books, and the tax returns that were actually filed. We did a forensic analysis and found that the second set of books was no different than the actual tax returns and therefore no underpayment. Unfortunately, because of the poor advice he received it was too late and too costly to go back and undo all the damage that was done. What we could do was meet with the IRS and the State to explain to them that there was no underreporting of Income and he was in this situation based on poor legal advice. By this point he was basically bankrupt, and the IRS and State were threatening to take his house and take his only remaining car. We were able to negotiate with both the IRS and State and eventually stopped the collection efforts. He was able to stay in his house and keep his car. Because we are trained forensic accountants, we look at things very differently than your typical accountant or lawyer. When it comes to an IRS audit or any audit there are some basic things you need to understand. First is why are you being audited. Audit Triggers Information matching your W-2s and 1099s do not agree with what you reported on your tax return (most common) The examination is related to another IRS audit IRS computer scoring system found large fluctuations in income or expenses You are self-employed or own a small business Deductions are not in line with prior years You took rental losses Home office deduction Random audit If you are being audited, the most important things to remember is: Do not ignore the notices Read the notice carefully Make sure you understand the issues at hand Organize your records Replace missing records Make sure you can present the facts in a clear and easy to understand manner Make copies, records tend to get lost when dealing with complex audits

Discount and Capitalization Rates

2020-06-16 08:50:42

When someone mentions the word discount rate, you often think of the Federal Reserve Discount Rate, Federal Funds Rate, Expected Rate of Return, Cost of Capital, Required Rate of Return or Capitalization Rate. Most of these terms mean the same thing or are derived from each other. However, the Federal Reserve Discount Rate is the rate at which the Federal Reserve loans money to banks. The Federal Funds Rate is the rate at which the Federal Reserve expects banks to loan money to each other. We are not discussing the Federal Reserve Discount Rate or the Federal Funds Rate in this video. In this video we will discuss rates used to analyze businesses, cash flow or other financial decision making. Some people have what is called a Personal Discount Rate. This helps them make financial decisions the same way a discount rate can help a corporation or investor make decisions. For example, if someone offered to pay you $100 for 10 years or a lump sum of $853 which would you select? That would depend on what your personal discount rate is. If it was 3% either one would be the same. If, however it was 4% you would be better off taking a lump sum payment. The discount rate is a very important tool that you can apply to investment decisions, valuations or analyzing different cash flows. The great importance of the discount rate is not that it provides you with the correct answer for investment opportunity, but rather it provides a framework under which you can analyze the investment and develop a much deeper understanding of your choices. The definition of discount rate is the rate of return used to discount future cash flows back to the present value. One of the top things to decide is how you calculate or find your discount rate. Typically, the best way to determine a discount rate for a company is to see what that company is required to pay investors to invest in the business. For example, if a company needs to pay investors 15% to make investments in the business then that would be there discount rate. Think about it this way, if they are borrowing at 15%, they would need to make at least 15% in the company otherwise they would be destroying value. A simple way to think about this is to assume it will cost you $100 to make a product, you would have to sell it for at least $100 otherwise you would be losing money. Preferably you would like to sell it for $125 or $150 and make a profit. Discount rate or your cost of capital is the same concept. Sometimes, companies will use what is called the buildup method in order to find their discount rate. The buildup rate can be obtained by doing the following: Safe Rate Equity Risk Premium Size Premium Specific Company Risk Premium From this you will be able to determine the discount rate. Once a company has its discount rate it just has to subtract the growth rate to get what is called a capitalization rate 14.05% (17.04-.03). The below chart shows an analysis of Free Cash Flow and utilizes both a discount rate and capitalization rate to arrive at the present value of 192 million dollars. This is something you do not see in any textbooks and most professors do not go into this, or at least explain it this way.

Representing Yourself in Court

2020-05-20 09:43:13

Representing Yourself in Court Every year in the United States millions of people attempt to navigate the US court system without an attorney. In some states as many as 80% to 90% of litigants are unrepresented. When someone represents themselves in court they are referred to as “Pro Se” which is Latin for “on one’s own behalf.” Our firm is contacted frequently by Pro Se clients who want to retain us for expert testimony. We recently had a case where we testified in court, and both parties were Pro Se. Obviously the judge was not too happy with the situation because this meant extra work for him. As Abraham Lincoln said, “a man who represents himself has a fool for a client”. There is of course some truth to this. In that case, it worked out for our Pro Se client since she was able to afford extensive forensic accounting and also see the case through to the very end. The result of that case was that she was able to obtain a significant alimony and child support. There are many successful Pro Se clients who are able to take on adversaries in court and win against experienced lawyers. One example: Anderson et al. Pacific Gas and Electric; Erin Brockovich, $133.6 settlement Two books to review if you are thinking about going Pro Se are, Represent Yourself in Court and Legal Research. Both can be found on nolo.com; a good site for Pro Se information. You probably should review these books and gain an understanding of the legal system before undertaking a legal matter and representing yourself. If you are unwilling to put the time in, you may want to re-think going Pro Se. From my experience people who get into complex litigation matters often run out of money and/or time. This is why so many people go Pro Se, the benefits are that you do not have to worry about paying hundreds of thousands of dollars in legal fees and you can have the stamina to pursue your case for years. Many attorneys are not able take on complex cases unless they can bill hundreds of thousands of dollars per year. Reason to go Pro Se: You know your case better than anyone You can spend money on experts and court reporters, etc. A lawyer will give you only representation that money can buy You have the right to represent yourself in court You are capable of representing yourself in court You will likely work much harder than your attorney You can not afford an attorney You are not intimidated by the legal process You will not run out of money and/or time if you are Pro Se One satirical look at Pro Se clients can be seen by viewing the YouTube clip from My Cousin Vinny, the movie. https://www.youtube.com/results?search_query=my+cousin+vinney The biggest mistakes that Pro Se clients make are: Spending too much time reacting to the other attorneys’ motions and discovery request. You need to be proactive and take the offensive, send out interrogatories, take depositions, make motions. Lacking confidence. You need to be confident even though you may not know all the pitfalls. Not spending money on experts and court reporters. The money supposedly saved by not hiring an attorney should be spent on necessities such as court reporters and experts. Overreacting to attorneys posturing. Remember to focus on the facts of the case not the posturing, antics and other judicial biases. You need to research and understand how to research if you are going to go Pro Se. Overconfidence: you need to be humble and do not overestimate your abilities. The legal system is not set up to help or benefit Pro Se clients for the most part so do not expect to be treated fairly.

Two Key Valuation Metrics

2020-05-04 12:24:38

Companies create value when an investment in a business yields returns in future cash flow. Generally, when return on invested capital is higher than the opportunity cost (lost rate of return), value is created. The two key metrics that indicate if a company is making money are growth and return on invested capital. If you want to judge fairly a management team of a company, you simply have to look at the growth in sales and the return on invested capital over a five to 10-year period. A great deal of work that we perform requires us to evaluate the profitability of businesses and value them. Two key metrics that are the most important are growth and return on invested capital. With these two metrics you can get an objective view of the company. When I talk about growth I am mainly talking about sales growth; how fast is a company growing, are sales increasing at 5% to 20%, or are they declining? Return on invested capital is a bit trickier. How much capital a company has depends on not only the equity but also long-term debt minus cash. This is then divided into net income to determine return on invested capital. I typically like to look at these over a long period of time to get an understanding of how well the business is being managed. Especially if it is a publicly held company or a well-run private company. Let us look at a real-life example: One free site that I like for financial information on public companies is Yahoo Finance. The following chart was compiled from information on that website. Litigation involving MetLife; evaluation of company performance:

COVID 19 Lost Profit Calculations,

2020-04-23 09:23:05

Understanding the key to lost profits. There seems to be a great deal of misunderstanding when we discuss lost profits with clients. Most of the time they think they are entitled to their sales that they would have made or projected to be made. However, this is unrealistic. When you do not have sales that also means that you probably do not have expenses that typically go with those sales. This is sometimes known as avoidable costs, because costs that would have been incurred in connection with sales, were not incurred because revenues were lost. For example, if you have to pay commissions you would expect your payroll to decrease. Also, you have to attempts to mitigate or lessen your losses, you cannot take advantage of a bad situation. You have to have a good understanding of cost behaviors when calculating damages. There are basically three types of costs; variable, fixed and semi-variable costs. The formula for lost profits is: Lost Profits = Lost Revenue - Avoided Costs We have many methodologies and techniques for calculating lost sales and damages. We had a national furniture retailer that contacted us a few years back. They had a location next to a major highway and the furniture store received a lot of traffic from this highway based on a large billboard located on the highway that advertised their stores offerings, Apparently, people passing would see the large billboard and then pull off at the next exit and make a right turn into the furniture store. At some point however the State of New Jersey undertook a major project to upgrade the highway that resulted in their sign being obstructed and the turn that allowed cars to easily get to their store was closed for over a year. This all occurred during a downturn in the economy and as a result of the lost business the furniture store had to close one of their top locations in the country. This is a tricky case, because we had two factors to deal with; a recession and also the loss of traffic due to the state’s construction on the highway. The furniture retailer needed our firm to calculate not only the lost sales for the prior year but also project the lost sales and profits into the foreseeable future. Essentially, we were stating that not only did they have lost profits, but the construction actually destroyed the business, which meant lost business value. This is a very complex undertaking, because first we had to determine the stores approximate growth rate, then determine lost sales from the recession and lost sales from the construction. Once we had that we then had projected sales into the future. Once we had those numbers, we then had to figure out what type of profits they could expect. We did all the work and went through several rounds of depositions before the case settled out of court. From Robert L. Dunn’s book Recovery of Lost Damages for Profits: The Proximate Cause Rule: “Recovery of damages for lost of profits is subject to the general principle that damages must be proximately caused by the wrongful conduct of the defendant. The principal governs the recovery of all compensatory damages. The requirement that lost profits damages must be proximately caused to be recoverable is expressed in innumerable cases.” Cases Analyzing the Reasonable Certainty Rule: Courts have modified the “certainty” rule into a more flexible one of “reasonable certainty.” In such instances, recovery may often be based on opinion evidence, in the legal sense of that term, from which liberal inferences may be drawn. Generally, proof of actual or even estimated costs is all that is required with certainty. Some of the modifications which have been aimed at avoiding the harsh requirements of the “certainty” rule include: (a) if the fact of damage is proven with certainty, the extent or amount thereof may be left to reasonable inference; (b) where a defendant’s wrong has caused the difficulty of proving damage, he cannot complain of the resulting uncertainty; (c) mere difficulty in ascertaining the amount of damage is not factual; (d) mathematical precision in fixing the exact amount is not required; (e) it is sufficient if the best evidence of the damage which is available is produced; and (f) the plaintiff is entitled to recover the value of his contract as measured by the value of his profits. Key elements of a lost profit claim Plaintiffs loss is proved with a reasonable degree of certainty Trier of fact is satisfied that the wrongful act of the defendant caused the loss of profit There is a basis for the claim, example; breach of contract Three things that must be proved by the plaintiff The defendant breached a legal duty to the plaintiff Defendant’s actions or failure to act damage the plaintiff The plaintiffs damages are proximately related to the defendant’s actions or failure to act The first step in computing lost profits is to determine the lost revenue. Typically, we call this the revenue the plaintiff could have earned but for the defendant’s actions. The three generally accepted ways to estimate lost revenues are:

Estate Litigation

2020-04-23 09:12:11

I would say about 33% of our forensic accounting work is related to Estates, Trusts and Wills or lack thereof. Usually the problems begin with poor record keeping, tax issues or outright fraud and theft. Today I am going to review some basics of estate planning so you can avoid or minimize some of the pitfalls. We had a case a while back where our firm was appointed by the court to take over and manage a wealthy widow’s finances. She was having some minor issues with dementia and her heirs. The problem we had was that the children lived throughout the country and they would invite their mom to stay with them. At one point she went to Florida to stay with her daughter, and she stayed for a very long time. The other children insisted that she was being held captive by their sister. Eventually she would leave and go to New York and the same thing would happen. It is as if she was being constantly kidnapped, and because of her dementia she was unable to leave. When she was on these trips large amounts would be charged to her accounts and credit cards. The sad thing was that she was a Holocaust survivor. It was like she was in “The Hotel California” (by the Eagles) “Welcome to the Hotel California Such a lovely place (such a lovely place) Such a lovely face. They livin' it up at the Hotel California What a nice surprise (what a nice surprise), bring your alibis Mirrors on the ceiling, The pink champagne on ice And she said, 'we are all just prisoners here, of our own device' And in the master's chambers, They gathered for the feast They stab it with their steely knives, But they just can't kill the beast Last thing I remember, I was Running for the door I had to find the passage back to the place I was before 'Relax' said the night man, 'We are programmed to receive. You can check out any time you like, But you can never leave!” Eventually we were able to put a stop to all the nonsense and resolve the financial issues. If you do not want something like that to happen to you here are some tips: You may want to sit down and make a list of all your assets and who you would like to inherit It is important to think about medical issues should they occur, beneficiaries for your young children or animals, etc. Make a list of all your assets and where they are held. If you have a business, succession planning is important. Typically, we like to see an AB Trust set up so that you can maximize the estate deduction and still have some type of control over the business. How are the assets titled; joint tenancy - cheap and easy to do. The assets pass directly to the joint person.. Remember your pension plans and IRAs generally have beneficiaries and they should be updated. Once you do this you should probably talk to your CPA and your attorney about how to proceed with setting up a will and/or trust. Types of wills; Simple Wills, Testamentary Trust Will, Pour Over Will, Oral Wills, Joint Wills, Living Wills. There are several different types of wills, but the important thing is to make sure you have one. The big question is, when is a trust better than a will? A trust provides more structure Protects your privacy It can reduce estate taxes If it is a living trust the trustee can manage property for you while you are alive Trusts are generally more difficult to contest than wills Trusts are more flexible than wills Trusts can impose greater discipline on beneficiaries There are several kinds of trusts, and in order to pick the one that is right for you and meets all of your requirements you will need to talk to a CPA and an attorney. A few trust types are Revocable Trust, Irrevocable Trust, Dynasty Trust, Insurance Trust, Living Trust, Special Needs Trust, Spence Thrift Trust and Testamentary Trust. The biggest problem you can have with wills and trusts is that the person you have managing the assets is not competent. The most important thing you can do, once you set up an estate plan is to designate a reliable executor, executrix or trustee. It all depends on the nature of your estate, your family situation and other factors. The main thing to remember is to have some idea of the potential executor and the pros and cons of each when you meet with your attorney to plan your estate Talk to the executor or trustee and make sure they understand the importance of good record-keeping Make sure they can pick good advisors to help handle taxes and legal issues Make sure they have a good disposition and are mostly grounded Name someone younger You never will find the perfect trustee or executor but picking the best one possible will save a great deal of headaches

Buying A Car, Part 4 of 4; The Negotiation

2020-04-02 08:56:55

How to negotiate for the purchase price and buy the car. Generally, I like to maintain a friendly relationship with the dealership and salespeople. It’s more fun and you may need them in the future. Dealerships and salespeople are good for future advice, maintenance, and repair services. You should only enter the dealer showroom when you know what type of car and the options you want and how much you should pay for the car. Make sure you learn how to use your calculator, either bring one or used the one on your cell phone. You need it to calculate loan payments and check the dealer’s paperwork. % of car purchase agreements have errors based on my experience. Bring a pad, pencil and a pen to the negotiation, obviously the dealers are not going to provide one to you. When you go to buy your car go on a day when they’re not busy typically at the end of the month on a Monday, Tuesday or Wednesday. I like to go late in the afternoon. Let the dealer know you’re ready to buy a car today. If he asks, tell him you will discuss financing and other issues after we’ve negotiated the price of the vehicle. Try and avoid telling him that you already have financing in place. Once you have the car price negotiated you can then discuss the financing alternatives (reiterate to him you’re buying a car today, if the price is right). Salesman may try to complicate the negotiations to confuse you, you need to keep them uncomplicated. Once you have negotiated the car price, you then can negotiate for after sale items that you may want, like tire insurance, or free lifetime oil changes etc. Once everything is agreed to you then may want to discuss a car trade or down payment, but you want to keep the negotiation as uncomplicated as possible. Remember you can sell your car yourself or use Autotrade.com

Buying A Car, Part 3 of 4; What Is the Monthly Cost, After You Buy the Car

2020-03-17 15:31:25

This video is going to focus on buying a new car, determining how much you can afford to pay and financing alternatives. Remember when you buy a car you have to include the cost to maintain and insure it. When you use financing that means you have to pay for collision and possibly comprehensive insurance. This can add thousands of dollars to your annual cost. Understanding loans, 3-year v 6 year etc. bankrate.com Annual cost is usually listed by the auto’s manufacturer You may want to call your insurance company to get an idea of how much the insurance will cost on the new car

Buying A Car, Part 2 of 4; Researching Your Car and Your Financing

2020-02-28 14:54:26

After you decide what type of vehicle you want, you need to determine if you want to buy it used, new or leased. My general feeling is that leasing a vehicle is only appropriate if you wish to get a new car every year and are rich. Buying a used car makes good sense if you’re looking for a car that cost a few thousand dollars. Remember, buying a used car has many risks, there are reasons the use car is for sale, somebody had issues with it and now wants to sell it. But the real fact is used car prices are high, many sells for over $18,000, you can buy a brand-new car for that price. For example. A New Nissan Versa Sedan cost under $13,500 (2019). So why would you buy a used car, without thewarrantees, current safety features and lower finance alternatives? Only cars that are lemons aretreaded “ Gresham’s Law”, and they are traded for the same value as good cars “Asymmetrical Information.” In order to research financing used bankrate.com or other reputable sites Once you know what type of car you want you can now solicit bids online (use your dummy email account) through truecar.com

Buying A Car, Part 1 of 4, Plans are Useless, but Planning is Critical; Pres. Eisenhower

2020-02-15 12:46:10

We are going to talk about something that bothers me often. That’s when somebody comes to me and discusses the issue’s they are having with a car purchase. It usually revolves around paying too much for the car or financing it improperly. Today what I’m going to do is address this and discuss the best way to buy a car. First, for every hour you spend in the dealership you should spend at least three hours researching the car cost and financing alternatives. You also need to set up, if you don’t already have what I call, junk email account, this is an email you’ll use when you research and discuss your car purchase with the dealer or financing firms. This way once you’re done with the transaction you can ignore the emails. Steps involved in buying a car that I’m going to go through are as follows Determining what vehicle type you want, sedan,SUV, hybrid, truck etc. Consumer Reports com com Ask your friends and relatives Car websites We are going to talk about something that bothers me often. That’s when somebody comes to me and discusses the issue’s they are having with a car purchase. It usually revolves around paying too much for the car or financing it improperly. Today what I’m going to do is address this and discuss the best way to buy a car. First, for every hour you spend in the dealership you should spend at least three hours researching the car cost and financing alternatives. You also need to set up, if you don’t already have what I call, junk email account, this is an email you’ll use when you research and discuss your car purchase with the dealer or financing firms. This way once you’re done with the transaction you can ignore the emails. Steps involved in buying a car that I’m going to go through are as follows Determining what vehicle type you want, sedan,SUV, hybrid, truck etc. Consumer Reports com com Ask your friends and relatives Car websites

Part 9 Divorce terms

2020-02-03 13:13:08

Monied Spouse and Non -Moneyed Spouse (family top earner) Dissipation Daubert Challenge Attribution) Equitable Distribution Alimony, maintenance DV Domestic Violence Mediation v Arbitration Psychometrician Vocational Evaluation Expert RSU Restricted Stock Unit Deferred compensation alimony modification, change of circumstances PSA-property settlement agreement prima facie burden of changed circumstances prima facie- accepted until proven incorrect Tax Cut and Job Act TCJA

Part 8 Child support

2020-01-20 09:57:03

Unlike alimony child support has never been deductible, and it’s usually easier to calculate based on guidelines. Go through attached forms Limit on guidelines $3600*52=$190,000

Part 7 Tax Cut and Job Act “TCJA”

2020-01-06 08:26:00

Tax Cut Jobs Act TCJA, alimony deductions, New Jersey alimony Tax Cut Jobs Act TCJA, caused a lot of problems last year and it also affected divorces drastically. It denied the deductibility of alimony and this caused a lot of problems. 2018 was an extremely busy year because most people getting a divorce wanted agreements signed prior to year end. Some states may still allow alimony deductions, currently, New Jersey does not but may change Projected to raise an additional $6.9 billion over the next 10 years Changes alimony, divisor 1/3 to ¼, Remember just because alimony is no longer deductible for divorces that are settled after 2018, alimony still deduction for those signed before 2019. Most people don’t realize that alimony has to meet certain requirements. And we’ve handled a few audits of alimony and the government is pretty strict in what is considered alimony.

Part 6 Importance of case law in Divorce

2019-12-20 13:05:05

Importance of case law, Crews v Crews, Lepis v Lepis, Mallamo v Mallamo understanding the importance of common law in divorce matters maybe go through these cases and get a good understanding of each case explanations all cases stress the importance of the Case Information Statement you need to read and interpret these cases and get them online. Case law is important, but I think it’s impossible for case law to apply 100% to any specific divorce. This is why I think that sometimes our opinion should supersede the law, which obviously is not very popular with attorneys and judges. Crew v Crews 2000 case, importance of establishing lifestyle Talks a lot about standard of living; establishing a standard of living, and this can be viewed with the statutory standards, listed in the law. Both parties need to be treated fairly. A modification in alimony, based on a change of circumstances. This case stressed the importance of establishing a standard of living, lifestyle is critical. After all you can’t modify something unless you understand what you’re modifying. Based on the court testimony they lived lavish lifestyle that included vacations in Martha’s Vineyard yacht club membership etc. but it appeared to be paid from Mr. cruises business. Burden of proof was on Ms. Crews to show the change of circumstances. The modification was denied, change of circumstances is capped by the marital lifestyle Lepis v Lepis 1980 case modification married in 1961 at three children and divorced in 1974., Wife sort modification remember, supporting spouse’s obligation is mainly determined by the quality of economic life during the marriage. The moving party must demonstrate the change of circumstances child support needs to increase, must demonstrate that the original agreement did not provide for new issues Increase in support is necessary when change of circumstances substantially impair the dependent spouse ability to maintain the standard of living reflected in the original divorce decree. Once burden is met then they can decide if money spouse can support the increase payments wife won and court had to reopen the case Mallamo v Mallamo, 1995 case Pendente Lite, prima facie requirement on the party seeking the order “Pendente Lite preserves the marital status quo; this is unreasonable because it’s untenable to maintain the status quo in many situations were now the family has two households and is paying legal and other fees out. Court ruled that reduction in child support did not constitute a retroactive modification. Importance of establishing an appropriate dependent taillight payment at the onset of a divorce. Attorney may try and avoid PL alimony and child support, i.e. pay mortgage etc., may affect or reduce alimony amount or time period To me case law seems a little suspicious, it’s impossible for any case to meet the same exact facts and circumstances as another case. What this means to me is that an expert’s opinion should be able to supersede any of the case law. This gets attorneys and judges extremely upset because it upends centuries of legal thought.

Part 5 NJ 2014 Alimony changes

2019-12-06 09:29:56

NJ 2014 Alimony changes, law N.J.S.A. 28 get: 34, Rehabilitation alimony, open duration, limited duration, reimbursement alimony Many attorneys still refer to this as the new law. In New Jersey in 2014 divorce law change substantially, when Gov. Christie signed into law N.J.S.A. 28 get: 34, the law basically did away with permanent alimony. There was a lot of uproar in the state because when permanent alimony was awarded in the past, that meant that if the money spouse retired, they still had to pay the alimony. This would result in them going back to court and trying to get a change of circumstances. Which was so troublesome. The new law seems to be restrictive, it actually made it more flexible. Now they could award more than one type of alimony in divorce settlements. Alimony is assumed to end once the obligors reaches retirement age as defined by the Social Security administration. bed and board, allows you to keep survivor benefits with Social Security and some insurance policies, also may not change the will and estate planning. open duration, only if parties are married for at least 20 years, ends when you remarry or live with someone else or spouse reaches retirement age limited duration, generally will not last longer than the marriage did, usually based on how long it will take you to improve your earning capacity. Courts may change the amount of the award but rarely the length of time it’s paid. Rehabilitation alimony, usually awarded based on receiving more education or training must follow specific steps for rehabilitation reimbursement alimony based on you supporting your spouse through school or additional training and expected to benefit from your spouse’s increase in income. “court of equity”

Part 4 Pendente Lite

2019-11-22 07:41:59

Pendente Lite Dissipation, Counter intuitive, awaiting the litigation If there’s one thing you need to know or at least talk about with people getting divorced or divorce attorneys in matrimonial engagements is Pendente Lite, which is Latin for awaiting the litigation. Remember this could go on for a year or more so if Pendente Lite is not appropriate it could have a dramatic effect on either party either the money spouse is not can have enough money to live on what the non-monied spouse. This is a complex area, remember New Jersey is an equitable division state, remember that the assets and income is divided equitably. Also, you have dissipation issues where sometimes a spouse may be taking money from the marriage and utilizing it to buy a townhouse for his girlfriend in Hoboken “Dissipation”. That money had to be considered in establishing the Pendente Lite. Counter intuitive, money used in marriage increases maintenance Pendente Lite sets the stage for how the judge will rule on alimony and child support.

Theory of The Firm

2019-11-15 11:48:54

The one question that is often asked of me is what makes a firm successful, why do some firms flourish, and others go out of business. Obviously, that is a very difficult question to answer. There are many reasons why some firms fail, and some succeed, some has to do with luck, but many has to do with strategies and the abilities of the entrepreneur that runs the company. But I want to start off at a more basic question, before we delve into why some firms survive and others don’t, that is why firms exist in the first place. And to understand that we have to go back to Adam Smith and his book The Wealth of Nations that was written in 1776. Most people don’t realize that Adam Smith was not only an economist but also a moral philosopher. In fact, one of his most famous books was The Theory of Moral Sentiments. The Wealth of Nations created the field of economics and provided the four basic cornerstones. They are: The beneficial power of self-interest The division of labor, or specialization The importance of freedom The ability of markets to self-organize, to have spontaneous order To understand this just have to look at the manufacturing involved in making a pin, Adam Smith pointed out that in order to make a pin it takes 18 distinctive operations. One person who is not properly trained could make maybe 20 pins a day. But if the various operations were divided among 10 highly trained employees, they could make 4,800 per man. This is the power of self-interest, specialization, freedom and self-organizing markets. That still does not answer the question of why there are firms. For example, in a market couldn’t each of the 10 men by their services. Why would you form a firm to employ all 10? This is something that was addressed by Coase in his 1934 article that appeared in the Economics Journal. Coase basically stated that firms exist because they can reduce cost. The firm’s created internal hierarchies that allows the firm to operate at lower cost than the market. For example, in the market you have to negotiate with each person separately. If they were employed by the same employer, the need for negotiation would be mitigated reducing time and money spent on contracts whether they were formal or informal contracts. Adam Smith discussed and implied that markets have many similar traits as those in biological evolution. Nelson and Winters put forth the assertion that just like evolution selects those traits most appropriate to the environment, the market selects business traits that can thrive and grow. Companies that have appropriate competencies, learning ability and routines that are in line with current market conditions will produce excess profits. Companies that produce these profits will grow and thrive in those that do not, will end up in bankruptcy. The big question is, what actually makes some company successful? Stephen Klepper an economist did an extensive study and published a paper in 2002 that addressed this issue. This study analyzed successful companies in the automobile, television and pharmaceutical industries. The conclusion shows that companies that entered the market early were able to grow rapidly. This growth produced excess cash flow and if it was reinvested into the company through R&D those companies survived. The research and development activities enabled the company to develop efficient methods and lower cost which made it better able to compete and drive rivals out of business. Some examples used were General Motors that was started in the 1930s yet still survives pharmaceutical companies like Pfizer and Bristol which of survive since the early 50s. It needs to be pointed out that R&D includes not only research and development in the traditional sense, but also methods that can be applied to a business-like Google. Research and development enable them to build better algorithms, understand their customers better and improve some products like U-Tube. Alchian, another famous economist pointed out that imitation being a primary source of innovation, without the necessary money a time required by extensive R&D. In conclusion companies that apply Adam Smith’s lessons and focus on their self-interest and specialize in high value core competencies will produce excess profits. Firms that are more efficient than the markets and have lower cost will be able to reinvest in research and development (use imitation when helpful) to improve their products and reduce cost. By having products that are needed and wanted by consumers and delivering them efficiently and at lower cost this will drive out and keep competition limited. The cycle will perpetuate itself and the company will grow until it exceeds a specific scale where the law of diminishing returns will stop its growth.

Case Information statement (CIS)

2019-11-07 13:59:24

Case Information statement (CIS), New Jersey is an equitable division state Sometimes when we’re working on a divorce engagement, we seem to forget that this is only one part of a complex divorce. Of course, the finances for child support, alimony, business valuations and investment are an extremely large and complex area of divorce. But there’s more important things that attorneys are dealing with. For example, child custody, physical abuse in the household, lots of psychological issues. A lot of times psychologist are brought in and/or job specialist to evaluate the partner’s employability and also their psychological issues. All this stuff is really emotionally draining and cause a lot of problems. And we are usually not involved in any of that aspect of the divorce. The importance of the CIS statement cannot be overstated. Many times, when I’m in divorce engagements these documents are updated biweekly. This is the one of the things you really need to understand. Let’s go through a case information statement. Typically, attorney once a client comes in for consultation, they will be given a CIS statement and asked them to fill it out as best as possible. Utilize quicken and quick books to compile information We look at the CIS as financial stmt for the family, Balance sheet, Income Statement and Cashflow statement, they all need to balance

Divorce from the standpoint of The NJ Forensic Accountant

2019-10-25 09:47:19

One of the things about dealing with matrimonial engagements is it’s important to understand the number of marriages, number divorce and number of divorce attorneys. If we look at the number of marriages based on the most recently available statistics, 48,000 marriages about half of those end up in divorce 23,000; but the number of attorneys is 41,000. So obviously there are plenty of attorneys to help with divorces. But the way it is calculated is its per 1000 people. Basically, for every thousand people in New Jersey about 4.8 get married in any given year and about 2.3 get divorced per thousand. And actually, the rate of divorce New Jersey’s lower than most other states and declining. But just remember sometimes the divorce engagement can last for one hour sometimes a divorce engagement can last for decades. It all depends on the complexity of the issues Why are divorces declining in NJ? Lowest marriage and divorce rate, horrendous cost of divorce, financially and emotionally 1/4 the size of Canada, bigger than half the countries in Europe, NJ population is still growing close to 9 million New Jersey Tax Guide on Divorce which is helpful because sometimes the laws change in New Jersey as far as how alimony, sale of house, responsibility for interest income and other investment income Name changes etc. is handled. New Jersey does not recognize innocent spouse or injured spouse relief The Internal Revenue Publication 504, which is excellent, and you should take a look and understand that as far as the tax credits, this addresses same-sex marriage filing jointly and separately head of household’s requirements custodial parents’ noncustodial parents. One thing that’s one thing that attorneys understand is how custodial parent works. By filling out this form it can allow one of the parties to qualify for the $2,000 tax credit per child. This form however does not need to head of household or earned income credit etc. But this could be very helpful to your attorney if this is filed properly. Alimony requirements, you have to meet the requirements in order to be deductible for pre-2018 divorce agreements. QDRO, qualified domestic relations order you want to get a good understanding in the layman’s terms of how a divorce works the Legal Services Of New Jersey has an excellent guide, this guide takes you through every aspect of divorce the filing complaint, legal procedures, case management conference etc. financial aspects of the divorce etc. and also utilize New Jersey courts.gov website overview of the divorce process types of custody for children written for the lay person form 8332, Revocation of Release of claim custodial parent Some rules Non-custodial parent is not entitled to head of house, earned income credit, based on regs if custodial parent violates the agreement noncustodial parent must go to the court for remedy not the IRS $2,000 tax credit Easily revoked

Divorce from the standpoint of The NJ Forensic Accountant

2019-10-17 08:51:14

I’ve been working on matrimonial engagements for over 30 years and have handled thousands of cases Best practices tip for matrimonial engagements’ (Certified in Financial Forensics) Subject expert, designed and question writer and reviewer; CSO, content Specific Outline, discovery, Laws and courts, expert testimony Family Law) verified by Psychometrician That’s one reason I depicted the opening side with the battle of Balaclava, where the British Light Brigade was ordered to advance even though heavy canon was locating on both sides of the valley. Often in matrimonial engagements you are requested by attorneys and/or clients to handle incredibly complex task in very short time and then be confronted with depositions and trial testimony. Just like the light brigade we are often outgunned and outmanned, and sometimes are own attorneys and clients contribute to the confusion. I plan on giving you some pointers at least so you understand the basics. when you perform matrimonial engagements, I want you to remember Lord Tennyson’s poem In baseball you bat 300 you make it to the hall of fame; in matrimonial engagements you need to bat over 980.

Preventing Employee Theft

2019-08-16 05:30:25

In the 21st century the most important asset of any company is its human capital or what’s better known as employees. Having motivated hard-working honest employees is what separates great companies from all the rest. Not sure if you ever have worked in one of the retail stores at the local mall. But if you did you notice something very curious; the companies seem overly concerned about employee theft. When employees show up for work they required to in most leaves and other close items in a separate location, they are restricted as to how they can access inventory, gift cards and the cash register. The reason for this is that these retail franchises realize that the people most likely to steal from them are their own employees. Unfortunately, one little known fact is that every year over $50 billion is stolen by employees, in fact 75% of employees have stolen at least once from their employer. This is based on studies by the Association of Certified Fraud Examiners ACFE The US Chamber of Commerce has indicated that employee theft was a main factor in 33% of all US bankruptcies. Who are the employees that are responsible for the theft, 59% are men. 34% have at least a bachelor’s degree. Why do employees steal? Two widely used fraud assessment tools that explain this are The Fraud Triangle, opportunity perceive pressure and rationalization and the other is M.I.C.I which stands for money ideology, coercion, ego How to prevent employee fraud: Good hiring procedures is the first line of defense Have a detailed employment application prepared Do a thorough check of employee’s applications including calling previous employers perform a credit check Make a copy of the import port and documents from the employee such as driver’s licenses and other information. Remember the formula employee theft probability = perceived risk of detection plus expected penalties Important to set up an anomalous tip lines and suggestion boxes Have a positive work environment have a clean desk policy Focus on the small stuff

Understanding Accounting,

2019-06-18 12:17:53

Understanding accounting, understanding T -Accounts and debits and credits, understanding deferred income and expenses, father of accounting, Luca Pacioli, how to learn accounting in 10 minutes or less. History of accounting, the language of business accounting,

New Jersey Forensic Accountant on Predicting Recessions

2019-05-17 07:00:09

When performing forensic evaluations and preparing business valuations it is important to have a good understanding of what the current economic conditions are telling you about the future. The best and most accurate methodology to predict the future economy especially in the United States is by using the 2 and 10 year yield curve analysis.

Cornerstones of Finance

2019-03-02 12:03:09

How to create real Value in a business

Secrets I learned about investing from the richest people on the planet

2019-02-14 12:33:45

New Jersey Forensic Accountant on how my clients became rich

How to Become a Forensic Accountant

2019-01-23 06:15:38

Characteristic of A Great Forensic Accountant

Hamada’s Equation

2019-01-02 13:17:31

Hamada’s equation is very important in finance and was invented by and named after Robert Hamada. The formula is used to separate financial risks from business risk. This formula takes out the effect of financing from a company’s beta. This formula is extremely useful because once a beta is un-levered we can then use it to compare to other companies with different capital structures.

Fixed Income Market and the 2 in 10 Year Bonds

2018-11-30 05:37:26

When you talk about bonds changes in the bond pricing use basis points. 100 points equals 1%. For example, if I say a bond went down 50 basis points, basically I am saying it went down ½ %. One of the best indicators of the health of the economy is the spread between the 2 in 10-year bond. I tracked this on a daily basis and usually the spread is 200 basis points. Typically, the 2 year is at 2% and the 10 year is at 4%. However, in recent years the spread has hovered around 100 basis points, and currently in 2017 was at a low of 75 basis points. I am very concerned about the spread between the 2 in 10 year, but maybe due to the structural changes in the economy this tightening of the spread will not lead to catastrophe as it has in the past.

Father of Forensic Accounting

2018-11-30 05:29:52

Many people do not realize that accounting actually started in 3500 BC, and it steadily developed until approximately 450 A.D. In 450 A.D. an Italian monk named Luca Picioli wrote a book called Summa the Arithmetic, Geometry of, Portion. This book codified for the first time in history the basic principles of accounting. The book discussed the methodology of recorded debits and credits, preparing income and balance sheets. That is why Luca Picioli is largely known as the father of accounting.

Exit Multiples in Business Valuation

2018-10-25 14:22:46

When valuing a company, exit multiples are very important. Typically, we use exit multiples as a sanity check. For example, if the company has a value of $2 million, EBITDA of $250,000, its exit multiple would be 8. Once we have the exit multiple we can then compare it to other companies within the industry.

Perpetuity Growth Method

2018-10-10 09:17:48

What is the perpetuity growth method? Essentially, it is exactly what it says it is; continued growth into the future. Most people have difficulty assuming something is going to grow forever. But if you actually go through the calculation it makes sense. For example, let’s say you were valuing Ford Motor Company in 1930 and you are looking at the cash flows, it turns out that the company existed for a very long time and continues to do very well today. However, what most people do not realize that when you get out 15 or 20 years the net present value is almost 0. Meaning that those future years the net present value of those calculations is not that much money. The perpetuity method is accurate.

23. Midyear Convention

2018-09-28 08:27:31

What is a midyear convention? In finance when we discount cash flows we assume that all the money is received at the end of the year, and discount it back. Obviously, this has some questionable assumptions, mainly that all the money would be received at December 31st. In order to make the projections more realistic many times we will adopt a midyear convention. This assumes that we receive the cash flow evenly throughout the year. While this is not perfect it is more accurate than what is typically done in most cash flow calculations.

23. Midyear Convention

2018-09-28 08:27:31

23. Midyear Convention

2018-09-28 08:27:31

23. Midyear Convention

2018-09-28 08:27:31

New Jersey Cannabis Industry

2018-09-26 08:19:45

New Jersey cannabis industry relies on the expertise of Robert A. Bonavito NJ forensic accountant for services.

Enterprise Value

2018-09-21 08:26:20

Many people do not realize that equity value is different from enterprise value. Equity value is mainly multiplying the number of shares outstanding by the value per share. Enterprise value is what the total enterprise is worth. In order to get that you have to add in the long-term debt plus the equity value and subtract out any cash. The reason for this is that if you were to buy a company you have to pay the debt holders and you have to pay the shareholders too. You also get the cash on the balance sheet.

Understanding Options

2018-09-12 09:06:40

There are only three reasons to use options. The first is that they provide income. You can sell an option on your stocks; it is called a covered call. The buyer will pay for that right to buy your stock. If the stock hits a strike price they have the right to buy your stock, if it does not hit the strike price you keep your stock and their fee. Either way you win. The second reason for options is protection. You can sell a “ put “on your stock at a specific price. This protects and locks in some of your gains. The third one is hedging, you could buy an option on the S&P 500. If your individual stock portfolio goes down, you actually receive money based on the S&P 500 going down. This hedge would help protect you should the market crash. But let’s face it most people use options for speculation, they buy options to get-rich-quick. Some people do make a reasonable amount of money with options. You can use leverage to buy a stock that went from $10 to $20 and make millions.

History of Divorce

2018-08-29 06:04:54

Currently the median length of marriage in the US is about 11 years. Divorce has always been a big topic in the US, even back in 1629 at the colony of Massachusetts of the Bay. The basis for divorce back then was adultery, desertion, bigamy and in many cases impotency. However, by 1776 divorce laws became less restrictive, but it must be pointed out that divorce was very uncommon in the 17th, 18th and 19th century. It was in the 20th century when divorce became more popular. Some states even became what are called “divorce mills: where you can get a divorce very easily.

Long-Term Returns on Stocks v. Bonds and Gold

2018-08-23 13:20:44

When people talk about investing they indicate that it is best to put your money in the bank, and that stocks are risky. That will work if you have rich parents or a rich uncle who can leave you a lot of money. If you have a sugar daddy BAD, then you probably do not need to be in the stock market. Everyone else should be fully invested. I say this because if you look at the long-term return of stocks vs. bonds and gold you would be shocked. Let’s say you invest $1 in gold, $1 in bonds and $1 in stocks in 1801. How much money do you think you would have in the bank today? The $1 you put in gold right now would be worth about $22. The $1 you put in bonds would be worth $17,000. The $1 you put in stocks would be worth $9 million. You and your advisor may want to put your money in stocks.

NJ Forensic Accountant, Robert A Bonavito - Presents Employee Theft Paper at Harvard University

2018-07-25 15:55:13

Authors Note Robert A. Bonavito is a forensic accountant with over 30 years’ experience in dealing with employee theft issues and has investigated for and testified in both civil and criminal actions involving employee theft. Correspondence to this paper should be addressed to Robert A. Bonavito, Scotch Plains, New Jersey. Email robert@rabcpafirm.com

Valuation; The Dividend Method

2018-07-19 10:36:51

The valuation of companies seems to be very difficult, but much of the difficulty is self-imposed. The way I value a company is just like any other investment. How much actual cash are you going to get over the life of the investment? When you own a company or stock, its value depends on its dividend and the cash you get when you sell the company. One simple way to calculate value is to take the dividend and divide by your capitalization rate. For example, if you have a dividend of $1,000 per year and your capitalization rate is 8% the company’s value is $12,500.

Four Keys to Being a Successful Forensic Accountant

2018-07-10 08:33:52

Many people ask me what it takes to be considered a good forensic accountant. Surprisingly many of the attributes that make someone a good forensic accountant are not typically sought out in the business world. For example, one of the most important things is that you think differently than the rest of the people. You need to have to understand on a PhD level many aspects of finance, accounting and business. You need to understand statistics, marketing, accounting, finance, and pretty much everything else. Your writing skills and mathematical skills need to be second to none. I Typically like to see someone who went to a good public or state college, followed up with a Masters in Finance and additional coursework at a good ivy school like Harvard University. The third thing is you need to have physical stamina and have been tested especially during early years from age 8 to 18. It is important to have played competitive sports such as football, soccer, wrestling and mixed martial arts The fourth thing is time travel. You need to be able to travel forward and backward in time. A lot of what we do requires us to go back and figure out what happened decades or even hundred years in the past and then carry that forward to the future.

Divorce, Pendente lite

2018-06-25 08:32:43

Pendente lite is a fancy term that describes the support that is paid when a divorce is ongoing. It is usually paid by the moneyed spouse to the non-moneyed spouse so that they can pay their bills and maintain their lifestyle. The interesting thing about pendente lite is that after a divorce is final the pendente lite becomes alimony. You may want to be very careful when negotiating pendente lite because in many cases the courts will look at the same guideline in order to calculate alimony. The one thing you may want to make sure of, is that if there is pendente lite paid that it is very clear that it is non-allocated and nontaxable. Either one of these should ensure that the pendente lite is nontaxable.

Inequality, One of the Causes

2018-06-15 08:56:34

Inequality has been in the news for the last 3000 years. I know recently it seems like you can’t pick up a paper or turn on the radio without hearing something about inequality. Especially since Piketty wrote a book called Capital, in which he blamed the ability of the wealthy to earn superior returns on their investments compared to what the average man can earn on his wages. The real problem and real cause of inequality is not federal taxes, state taxes or the lack of good jobs, it is payroll taxes. If you take the average person and say they start working age 15 at the local supermarket or fast food restaurant, and retired at age 67, during that time they worked for 52 years and let’s say their average income over those 52 years was $75,000. Payroll taxes that they would have contributed are about 20% per paycheck which is composed mainly of Social Security, Medicare, Unemployment, Family Leave Act and other plans that provide little if any benefit to the average citizen, and in many cases cost more to administer than any benefits they pay out. The interesting thing is that these payroll taxes were taxed again by the federal and state government. Yes, payroll taxes that you do not receive are taxed. When they retire at age 67 the government gives them $500,000 paid out over 15 or 20 years, but they tax this again, so the net present value of that is about $300,000. Now if the government rather than taking this money and doing whatever they do with it, put it in a market rate low cost investment when this couple retire they would have $6.7 million in their account. The difference between the $300,000 and the $6,700,000 is a big cause of inequality.

What is Ex Ante and Ex Post?

2018-06-06 09:58:50

Two ways of calculating damages are the Ex Post discounting and the Ex Ante discounting when calculating lost profits. The Ex Post methodology looks back to an event after it occurred and decides what to do to clean it up. The Ex Ante methodology involves looking forward and asking what effect the decision will have in the future. For example, let’s say I build a house, but by accident I build it 18 inches onto my neighbor’s property. What should we do about this?

The Slippery Slope and Ad Hominem Arguments

2018-06-01 04:54:25

When I am in court testifying at a deposition or trial I am often confronted with two techniques that attorneys like to use. They are called the slippery slope technique and the ad hominem technique. When attorneys use the slippery slope technique they ask me a simple question and then have me assume that X, Y, and Z happened. Most of the time their scenarios are not realistic. The other technique is the ad hominem attack; they attack my character rather than my opinions and arguments. Most judges and juries see through these techniques pretty quickly.

The Sharpe Ratio

2018-05-19 09:17:09

I often hear clients discuss how they are earning 10%, 15% or even 20% on their investments. I tell them that is only half the story, the real story is what type of risk they are taking to earn that return. For example, I can invest money in a government bond that would earn 4% and be risk-free or a biotechnology company that has a return of 20%; which one is more likely to result in loss of my investment?. When calculating the risk related to returns, I use the Sharpe Ratio. This ratio compares returns over their risk. I realize how much risk I am taking to obtain a certain return. The formula is expected return minus risk-free rate over the standard deviation of the investment.

Divorce Steneken

2018-05-10 04:56:10

Steneken is always an interesting case that I like to revisit, mainly because it is accused of being the “double dip” case in divorces. The main concern with this case is that it involves the dividing of a business. When a business owner is getting divorced and his business value is being subject to equitable distribution some sticky issues arise when dividing his income between the business value and alimony. This seems like an obvious double dip, but if done correctly it should not be. The way I look at this case is that the business value after deducting reasonable compensation would be split between the moneyed and non-money spouse. Alimony would be calculated based on the reasonable salary earned through the business. In this way you would not be double counting.

Bank Accounting

2018-04-19 09:58:14

People with accounting backgrounds may not be familiar with how bank accounting operates. When you think of bank operations you have to remember that the primary income of the bank is interest income. The main operating expense is interest that they pay out to customers. After subtracting the interest income from the interest expense, you then have operating income before the banks expenses. For example, banks are required by regulatory agencies to keep a certain amount of money on hand as reserves. In addition, banks have two sources to borrow; one is the Federal Reserve and the other is banks.

The Savings Component

2018-04-07 14:46:38

When getting divorced, the state looks at a divorce the same as they look at splitting up the assets of a corporation. Each individual typically gets 50% of the assets. However, there are some situations, especially when calculating alimony that you need to remember. The main one is the savings component. For example, someone who is making $2,000 per month may be putting a portion of that into their savings. If a couple is saving $500 per month out of monthly income of $2,000 the income that should be split between the parties is $2,000 not $1,500. The reason for this is that I look at the $2,000 as the real standard of living and not just the $1,500.

How to Buy a New Car

2018-03-31 11:40:32

I realize that this is probably against the conventional wisdom that you have heard about buying a car. Many people like to buy a used car thinking they get a better deal, or lease a car because they can put less money down. My experience has been just the opposite. When you buy a new car you get extended warranties, you can negotiate better prices and lower rates on loans. It is easy to find out the value of a new car, but practically impossible for a used car. If a dealer does get a good used car they usually sell it to a friend, not you. Right now, many used cars are selling for about $15,000-$20,000. When you are looking for a used car or to lease a car, remember you can usually buy a new car for the same price.

How and Why to Leave Your Bank

2018-03-17 09:21:46

Many people I speak to are not happy with their commercial banks. Some of the reasons are as follows; banks putting profits ahead of consumers, overdraft fees and other charges. One possible solution is to take a look at community banks and credit unions. their focus is more on the local community, rather than lending to companies and wealthy families. It is important to realize that according to many studies credit union account holders pay fees of about $71 compared to commercial bank account holders that pay average fees of $183. Typically credit unions and community banks offer more consumer-friendly products, but they still require a revenue source to pay expenses.

Eichleay Formula

2018-03-10 11:30:31

When we have damage cases involving construction delays, we typically employ the Eichleay Formula in order to calculate those damages. Damages can be incurred if a construction company has a delay. Especially, if they cannot replace that job with another, thus resulting in overhead charges that cannot be charged to a Job. The Eichleay Formula is a court tested formulation that allows you to allocate overhead to a project and determine the actual damages that resulted from the delay. Once the damages are established it is the attorney’s responsibility to prove that the reason for the delay was caused by the defendant.

Why Mergers and Acquisition Happen

2018-02-26 15:05:52

I often see companies merge both private and public, and have to scratch my head and say what was the reason behind that merger? There are many reasons for Mergers and acquisitions to happen, some good and some bad. Good reasons are for operational synergy for financial synergy. Mergers made because they bring economy of scale or lower the cost of capital can be good. There are many bad reasons like managerial pride. This is one of the main reasons that many mergers fail. When management feels they need to acquire a company to make themselves look busy, many times they over pay and the long-term results of this are disastrous.

Finding Information on Public Companies

2018-02-17 11:05:23

When you talk to your investment advisor or your friends about investing in public companies and other information, ask them if they look at the company’s 10-K, 10Q or S-1. There is a good chance that they will not know what you are talking about. Most people do not actually go the securities and exchange website (sec.com) for a public company and do the research. If you want to learn something about a specific industry or company, the sec.com website is the first place to start. Why Mergers and Acquisition Happen I often see companies merge both private and public, and have to scratch my head and say what was the reason behind that merger? There are many reasons for Mergers and acquisitions to happen, some good and some bad. Good reasons are for operational synergy for financial synergy. Mergers made because they bring economy of scale or lower the cost of capital can be good. There are many bad reasons like managerial pride. This is one of the main reasons that many mergers fail. When management feels they need to acquire a company to make themselves look busy, many times they over pay and the long-term results of this are disastrous.

3. New Jersey Trustee Commissions

2018-02-08 15:21:47

Most people look at it as an honor to be appointed someone’s executor or trustee. But once they have the duties they soon find out that this is all work and little gratitude. Often the trustees and executors are blamed for any kind of issues or problems with the trust or estate, but if everything goes as planned no one really notices. The other thing is you are not really compensated for your time, the State of NJ has strict guidelines as to what you can receive as a trustee or executor. For Estates you have the following formula for the corpus: 5% of the first $200,000 3.5% of the next $800,000 2% of the excess over $1,000,000 In addition, you earn 6% on the earnings For Trusts use the following: .5% first $400,000 .3% for the excess When you calculate your time, you find that you are only earning seven or eight dollars an hour for all of your hard work. There is one little exception that few people do not realize. If you do provide extraordinary services to the estate or trust you may be able to go back to the court and request to be properly compensated for that.

Hiding Income at The Internal Revenue Service

2018-02-01 13:48:40

In our divorce practice we often are retained to search for hidden assets. Sometimes there hidden offshore in secret bank accounts, or sophisticated schemes that involve multiple companies. One of the most interesting places I find people like to hide income is at the Internal Revenue Service. For example, someone working at large company and is getting divorced may increase their federal and state deductions for taxes dramatically. The reason for this is that once a divorce is over they can get a large refund on their tax return . I do often find that when we analysis the tax returns the spouse is not aware of the refund that may be in the tens of thousands of dollars. Also, by having a lower net check they can argue for decreased alimony and child support payments. One of the things you may check when getting divorced is to see if your spouse’s hiding money at the Internal Revenue Service

Capital Structure and Risk

2018-01-22 16:22:45

When I try to explain capital structure to someone, I usually make it personal. For example, when they purchased a car or need a mortgage they had to make a decision between how much to borrow and how much cash to put down. This is the type of thinking that everyone who makes a large purchase goes through. They weigh the pluses and minuses of both the debt and cash. They realize for example they can usually buy a more expensive car or bigger house if they have more debt and use a lot of their cash. They also realize that if their income in the future is not what they expect this could have drastic effect on their lifestyle. Essentially when you think about that you need you think about risk. The more debt the more riskier you are. Most people look at debt as a negative, however I think it’s more complex than that. Think of a family that needs a bigger house because they have a growing family. They cannot afford it based on their income and cash they have the bank, but if they borrow they can afford to have the extra bedroom and the extra bathroom. In addition, having debt makes you more conscious and more alert as to your spending habits and income opportunities. If you have a lot of cash in the bank, people have a tendency to become lazy and waste the cash.

Understanding The $38 Trillion Bond Market

2017-10-25 14:30:53

A bond is just like a mortgage there is a lender and the borrower. Bonds have a stated interest rate, i.e. 5%. The face value of the bond is usually issued in increments of $1,000. As the bonds trade the value of the bond will fluctuate but the interest rate will say the same. This means the effective rate of the interest on the bond will have to change. For example, if everybody is buying the bond, the effective rate will probably go down from 5%, and conversely if no one is buying the bond effective rate of the bond will have to increase above 5%.

Forensic Fraud Income Reconstruction

2017-10-18 06:32:49

In our firm we have many techniques to reconstruct income. Two of the most popular and widely used are, bank deposit analysis and financial status analysis. Under the bank deposit analysis, we take a look at all your deposits and compare your gross income reported to the total deposits in the bank. This is a simple but straightforward method to get a good idea of any inconsistencies. The second one financial status analysis, also called the Cash-T analysis. In the Cash -T Analysis we basically reconstruct your lifestyle. Once we know your lifestyle we can figure out how much money you will need to support that lifestyle. After looking at these two basic methodologies we can then proceed to more complex analysis.

Framework for Teaching Financial Planning in High School

2017-10-12 07:57:36

The importance of understanding finances cannot be understated, financial mistakes will be long-lasting. I think a good template for teaching financial planning in high school is the same one that we use for drivers’ education. Most kids learn to drive initially by constantly watching their parents drive. At some point in high school they have to take a driver’s education class which requires them to pass a written exam at the end of that class. Once this exam is passed they spend 15 hours of driving with a professional driver. After that they receive what’s known as a temporary driving permit. With restrictions they continue to drive for one year and if they have a good driving record they then can take a driver’s test. If they pass the driver test they still have a two-year probationary period under which your driving is monitored. The whole training takes between two and three years before they earn their driver’s license. I would propose a similar type of education requirement for financial planning, where you’d have to take a class and pass a written test; upon passing that written test you’d be given a bank account, credit card, investment account, a retirement account, and a small loan. These accounts would be set up and monitored by an experienced professional. For one year you would use these various accounts for spending, your credit card, paying a small loan off, balancing your checkbook, investing a small portion in a retirement account. After one year, your performance would be evaluated to make sure you properly handle these various accounts. After you met those requirements you then would go to the next phase where you’d actually use these accounts for a period of two years which again, would be monitored by professionals. After two years, if you didn’t have any major problems you then would be free to manage these accounts on your own. I think the best way to learn financial planning and finances not only by studying but actually doing it, and the plan that I’ve outlined would accomplish both of these goals.

How Billionaires Become Billionaires

2017-09-08 04:35:52

There are many ways that people become billionaires, some inherit it, some get lucky and some earn it. For the ones that earn it, being able to accurately forecast the future is a key aspect. There is one common technique they use to forecast the future. They use the 2 and 10-year spread on government bonds to do this. The Federal Board of Governors of the Federal Reserve publishes a weekly summary of selected interest rates called H.15. On this lists you can find the yields for the 2 and 10-year bond. By tracking these two yields and calculating the spread between them you can actually gauge the future expectations for the economy. If the bond yield is compressing it means were probably heading for recession if the bond spread is increasing were probably heading for an expansion. Knowing this information will be very useful as you can imagine.

How My Client Made $5,159,930

2017-08-15 08:01:34

I know it sounds like a lot of money and hard work, but what this client simply did was put $5,000 in a tax-free investment from age 19 to age 30, only 11 payments. They invested in a Vanguard low-cost tax efficient fund that averaged a return of 10%.

My job is best described as a garbage man

2017-08-01 08:00:41

My job is best described as a garbage man, essentially, my firm takes unorganized, meaningless information from clients and turns it into gold, dimond’s and precious stones.

The Importance of Mergers and Acquisitions

2017-07-22 08:39:42

You may often wonder why there are so many mergers and acquisitions, hardly a day goes by when you don’t hear of a company merging or acquiring another company. The importance of mergers and acquisitions cannot be understated, it’s an important element of a dynamic economy. The reason that mergers and acquisitions are so important is that it puts assets in the hands of better owners. Unfortunately, academic studies show that more than 1/3 of acquisitions actually destroy shareholder value. The reason for this is that the acquirer over pays for the acquisition. When this is done the selling company actually receives all the benefits and the acquirer has paid fair market value for the company and receives none. This is one of the reasons why a proper and appropriate valuation is needed when a company is acquiring another company.

NJ Forensic Accountant

2017-07-15 08:15:03

Article on our firm

4. Investing in Franchises

2017-07-15 07:40:41

Most people at some point have a dream of owning their own business and being their own boss. They naturally assumed that owning a franchise is the easiest way to freedom and controlling their destiny. However, the truth is most franchises are not very successful, when you consider all of the costs, like hours worked, startup fees, ongoing franchise charges, forgone salary and benefits. The main problem with the franchise is that you have two partners, one is the government and one is the franchisor. When you adjust for the actual costs you are usually left with little or no profit, so think about it carefully before you invest in a franchise.

6. Mutual Fund Expenses

2017-06-24 10:50:31

Some of you think that when you invest in a mutual fund there are no cost. But as most of us realize there’s no such thing as a free lunch. I think we have to realize that it does take money to manage a mutual fund, so there needs to be some type of cost. Hidden cost of mutual funds can range from .3% to over 3%. As you can see this is a very large fluctuation, and this can have extreme effects on your earnings. I try to tell my clients to carefully analyze all expenses of mutual funds and try to get as close to or under .5%.

The Power of a Roth IRA

2017-06-17 06:51:56

What is the best way to accumulate wealth? I would say open a Roth IRA. The Roth IRA is a unique vehicle in that it lets you contribute with after-tax dollars into a Roth IRA and grow tax-free. At any point in time the principal amount can be taken out without tax consequences and once you reach retirement age you can take out as much as you want tax-free. In fact, if a 20-year-old put just $5,000 in a Roth IRA for 11 consecutive years and stopped, by the time they retire they would have well over $5 million; remember its tax free.

Return On Invested Capital

2017-06-10 07:55:44

If someone was to ask me for one matrix that best describes how successful a company is, it would be Return On Invested Capital (ROIC). This ratio gives you a strong glimpse of how the business is operating in a competitive market. It simply gives you the return or as I like to say it’s price - cost /capital. Michael Porter, the Harvard business professor in his book competitive strategies list five forces that define an industry. They are, barriers to entry, substitution threat, buyer power, supplier power, and competition rivalry. If you want to understand how well a company is doing in its industry simply take a look at its Return On Invested Capital and compare it to its competitors.

Predicting the movement in the stock market

2017-05-26 10:05:06

Most of the top professionals in the investment community have proprietary methodologies that help them predict the trends of the market. These are very complex but it can be broken down simply by looking at the spread between the 10 year and 2 year bond yields. The spread of this bond tells you whether people are nervous about the future or optimistic. Generally, if the spread on the two and 10-year bond is contracting it means people are pessimistic and we may be heading towards a recession, however if the bond spread is increasing it means that people are very optimistic about the future and the stock market will be increasing.

12. Thinking of Changing Your Residence for Tax Reasons

2017-05-10 10:40:46

Many people in the Northeast want to relocate to a low-cost state in order to reduce their living expenses and avoid high taxes. They still however, want the benefits of living in the Northeast that includes the great climate, unlimited entertainment, best doctors etc. Essentially, they want the best of both worlds, low taxes with a great lifestyle. In order to determine residency, the government looks at several factors such as voter registration, car insurance, licenses, and credit card bills. Most people feel just changing your voter registration is enough, but all you have to do is look at their bank statements and credit card bills and you’ll see that they spend most of their time in the Northeast. The rules regarding residence can be complicated, so plan carefully.

Three Questions You Should ask about your Money

2017-05-01 10:20:51

What is the best way to save your money? What is the best way to invest your money? What is the best way to protect your money? These are three questions that everyone should be able to answer. If you don’t ask the question you’ll never figure out the best answer.

Are Timeshares A Good Investments?

2017-04-08 03:56:26

I have a couple clients that actually like timeshares, but these clients are few and far between. I tell my clients if you have plenty of money and lots of vacation time and like to go to the same place year in year out, timeshares probably are not a bad investment. However, the key problem with timeshares are they are expensive, they have annual carrying costs that are increasing, and they are extremely difficult to sell. Remember if you have a timeshare, you still have to fly there and provide all of your food and entertainment cost. There are a few positive aspects of timeshares, but the many problems far outweigh those positive aspects. Never invest in anything that eats or needs repairs.

What are the Four Cornerstones of Value?

2017-04-01 08:20:54

1)Companies create value by investing capital from investors to generate future cash flows at a rate of return exceeding the cost of that capital. 2)Value is created for shareholders when a company generates higher cash flows, not by rearranging claims on those cash flows. 3)A company’s performance in the stock market is given by changes in the stock market expectations not just the company’s actual performance, this is sometimes called the expectation treadmill. 4)The value of a business depends on who is managing it and what strategy they pursue, “Best Managers.”

What's wrong with a 401K

2017-03-24 08:21:21

Most people think that is appropriate to contribute as much as you can to your company 401(k), no matter what. My opinion is that it is not always the best way to invest your money. You should consider several factors before investing in your company 401K, like, what are your investment choices, whether or not the employer matches your contribution, and will you need that money before you retire. The biggest problems I have with 401(k)s is that people contribute to them in their 20s and early 30s, however when they approach their mid-30s they decide to make an investment or buy a house and find that they have no savings. There only choice is to raid there 401(k). Unfortunately, the 401(k) has not performed that well and so now the end up taking the money out paying taxes and penalties which can be as much is 50%. This happens a lot more often than you think. My suggestion, carefully consider whether to invest in your 401(k), there are much better option sometimes, such as the Roth IRA.

Fiduciary Standard v. Suitability Standards

2017-03-11 09:15:51

In our litigation practice we have many law firms contacting us to review, prepare reports and testify on poor performing investments. The key aspect to understanding whether your advisor did a good job, is understanding the difference between fiduciary standard and suitability standard. In fiduciary standard the financial advisor has a duty to act in your best interest not to steer you into overpriced investment products. Under suitability standard the financial advisor is under no obligation to find the best deal for you. This is probably why you rarely see an investment advisor invest someone into treasury bills or no load efficient mutual funds.

Expectation Treadmill

2017-03-04 04:58:16

At any given point in time a company’s value may not only be based on cash flow, assets or other criteria. It may be based on the expectations for that company. If the company is well-positioned and investors expect the market share to geometrically expand the value of the company will expand in lockstep with these expectations.

Credit Markets

2017-02-25 08:01:05

We are familiar with the stock market, but less familiar with the credit market. However, the credit market dwarfs the stock market in transactions and in market value. Trillions of dollars are traded on the credit markets each week. In a nutshell, credit markets are generally trade government and corporate bonds. If you are a believer in wisdom of the crowd, you will closely follow the credit markets. Depending on the demand for a particular bond interest rates will fluctuate and reflect the thinking of the market participants. For example, if the crowds are thinking that a recession is around the corner they will pile into bonds driving the rates down. Anyone following the credit markets will quickly be aware of what the general feeling of consumers are.

Core Value

2017-02-16 09:37:48

Essentially, companies create value for their owners by investing cash to generate more cash in the future. The three important drivers in order to determine core value for a company are growth, return on invested capital (ROIC) and cash flow. The interplay of these three characteristics can be seen in successful companies. As a company grows it usually creates more cash flow and at the same time increases return on invested capital.

Consumer Expenditures by Age

2017-01-28 12:59:18

There is a trend to expenditures and income, this trend closely follows a persons age. Naturally, for most of your life your income has to exceed or equal your expenses otherwise you would go bankrupt. However, in your early 20s studies show that your expenditures do actually exceed your income. In your 30s 40s and 50s the trend of income exceeding your expenditures makes sense, since you’ll be saving for retirement and unplanned expenses. By your 60s and 70s income and expenses level off.

Basics of a Leveraged Buyout

2017-01-12 04:57:23

Leveraged buyouts in the 80s were extremely popular and recently there has been a resurgence in the use of leveraged buyouts. I’m going to go through what I call my LBO on a cocktail napkin. This example will demonstrate how it would work from the perspective of the buyers and seller and how the LBO would benefit both parties.

The three main methodologies used in valuing a business.

2016-12-20 08:44:47

This New Jersey business appraiser discusses the three methodologies that are used when valuing a business. Usually, his firm attempts to use all three methodologies whether it is a public company or a private company.

The IRS is watching your divorce

2016-11-02 09:15:13

Why is the IRS watching your divorce? You should have a good understanding of decisions you are making during your divorce. After all, these decisions may affect your tax returns for many years.

Business Model Canvas

2016-10-04 05:33:57

It would be nice to have a canvas on your wall that shows you all of your company’s key inputs as one picture. There is such a tool, and it is called the Business Model Canvas.

Retirement Benefits in a Divorce

2016-09-22 14:31:47

After spending most of your life accumulating retirement benefits, you probably should have a good idea of how a divorce will affect these benefits.

Valuation of a Business in a Nutshell

2016-09-07 05:50:02

This business appraiser attempts to explain the concepts used in a business valuation in less than two minutes.

Terminal Value

2016-08-25 05:20:09

There are public companies that have been around for more than 150 years. So how do you perform a valuation on a business that may survive that long? One technique that we use in our firm is called Terminal Value.

Don’t Let Your Children Lose $5,159,930 Too!

2016-08-22 11:53:03

Help fight Inequality, Don’t Let Your Children Lose $5,159,930 Too!

The growth of index funds; is business valuation dead?

2016-08-15 09:53:37

More and more people are waking up in the morning and scratching their heads, wondering why they are investing in the stock market. It’s not that they are really worrying about why they are investing in the stock market, but why they’re trading stocks?

Contingent claims valuation

2016-07-22 09:02:43

Understanding the contingent claims valuation method can be extremely useful when valuing asset rich companies like coal mines, oil companies, and other natural resource businesses.

Real Estate Investments

2016-07-08 09:28:27

A little-known fact that real estate generally appreciates at the rate of inflation is not known by many investors. This is why your home may not be a great investment after all, especially compared to other investment alternatives.

Understanding Alpha and Lambda

2016-06-24 14:36:34

When you buy a stock or invest with an investment manager two key terms you should use and understand are Alpha and Lambda.

How to analyze an Investment Opportunity

2016-06-02 09:13:29

New Jersey forensic Accountant shows how to apply Net Present Value to build a framework to analyze any investment or opportunity.

Intrinsic Valuation Method

2016-05-20 08:29:23

The most widely used method of valuation is the intrinsic valuation. This method has been around for over 2,500 years and has been proven by the test of time.

Relative Valuation Method

2016-05-04 13:30:33

The relative method of valuation can be extremely useful and provide a quick snapshot of the value parameters of a business. Rules of thumb and ratios can sometimes be very useful when utilizing this method.

How much will I have to pay in child support?

2016-04-21 15:38:53

Thousands and thousands of pages have been written about child support. This divorce accountant attempts to give you a snapshot of child-support.

NJ forensic accountant deals with life or death issues

2016-04-07 16:18:47

Issues with the house in a divorce

2016-03-23 07:48:55

For most people their largest asset is their house. This video will discuss some of the key decisions you have to make regarding this asset in a matrimonial matter.

New Jersey Divorce Accountant saves client over $50,000 with divorce tax planning.

2016-03-11 14:04:02

NJ Forensic Accountant looks at SWOT, USPS could pose a threat to UPS

2016-02-17 14:59:17

Many tools are used to assist business appraisers in valuing businesses. One of these tools invented in the early 1960s has survived the test of time; “SWOT”, and should be used in most situation analysis, including business appraisals.

NJ Forensic Accountant successfully testifies on hidden account that grew to over 4 million dollars, using Aristocrats theory.

2016-02-03 09:01:06

Something You will rarely hear discussed on investment shows, is the Aristocrats. The Aristocrats is a small list of elite dividend paying stocks.

Understanding the US Tax Code in less the two minutes.

2016-01-20 06:31:43

The US Tax Code simplified by NJ forensic accountant

Why Did the Harvard University Endowment Fund Only Earn 5.8%

2016-01-05 13:05:39

Why do low-cost index funds outperform 98% of actively managed funds in the long-term? This short discussion attempts to shed some light on this paradox, using the Harvard University Endowment Fund as an example.

Robert A. Bonavito discusses how we look at returns. He explains what a risk-free rate and equity risk premium are. Learn more about Robert A. Bonavito’s New Jersey forensic accounting services.

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Understanding the Weighted Average Cost of Capital

2015-12-07 14:55:21

New Jersey business valuation accountant Robert A. Bonavito, CPA, explains what the weighted average cost of capital is. By understanding what your weighted average cost of capital is, you will see why debt is so dangerous and how it affects the operation of your business and the calculation of cost of capital.

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Divorce in New Jersey: Understanding Premarital Assets

2015-11-17 14:28:40

Premarital assets can become a concern when a couple is going through a divorce. A divorce accountant can help you prove if an asset was premarital and help you determine whether the asset is active or passive. Robert A. Bonavito, CPA, a divorce accountant in New Jersey, explains the importance of premarital assets, where the burden of establishing immunity falls, and key concepts that affect divorce calculations.

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Time Travel: Present and Future Value Calculations

2015-10-26 10:21:31

New Jersey Forensic Accountant Robert A. Bonavito, CPA, explains present and future values. Time travel and finance are intertwined through the calculation of present and future value. In this video, Bonavito gives examples of how present and future value calculations can be used in your everyday life to understand where you will be in 30 years. These tools combined with a good financial advisor or low-cost investment funds can change your life.

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The Fraud Triangle and Protecting Your Business from Fraud

2015-10-05 13:08:22

The amount of fraud that happens in the world each year is over a trillion dollars. New Jersey Forensic Accountant Robert A. Bonavito, CPA, discusses the fraud triangle, which was invented by Donald Cressey to explain why employees steal and who is most likely to steal. Using case examples, Bonavito explains the different types of predators and the importance of keeping control to protect yourself and your business from fraud.

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Why You Need a Forensic Accountant

2015-09-14 10:40:57

What is a forensic accountant, and why do you need one? In this video, Robert A. Bonavito, CPA, explains that a forensic accountant is an independent expert who can testify in court. Article 12 of the New Jersey Rules of Evidence covers opinions and expert testimony. Bonavito discusses what expert testimony is, the basis of expert testimony, and the opinion on the ultimate issue.

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The Double Dip Case and Business Valuations: Steneken v Steneken

2015-08-24 13:15:08

Many small business owners feel that they are being taxed twice, once with alimony and once when they sell half of their business. This is often referred to as the “double-dip” issue. However, if you understand how a business valuation is done, you will realize that is not the case. In this video, Robert A. Bonavito, CPA, a divorce accountant in New Jersey, explains how compensation is deducted, how it affects cash flow, and how alimony is paid.

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Arithmetic Mean and Geometric Mean in Relation to Profit

2015-08-04 04:59:49

Don’t believe what you read in the papers! New Jersey Forensic Accountant Robert A. Bonavito, CPA, speaks on arithmetic mean and geometric mean. These two basic definitions have a dramatic effect on the way you view financial news. Much of what you hear and read about in business shows and magazines is based on deception and fraud.

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Sheridan v. Sheridan and the Double-Dip Issue

2015-07-13 09:32:11

Robert A. Bonavito CPA, a divorce accountant in New Jersey, speaks on Sheridan v. Sheridan. This video focuses on the double dip issue in divorce, which was brought up in the 2004 case of Steneken v. Steneken.

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Divorce in New Jersey - Process, Rules & Regulations

2015-06-22 13:31:14

Every state has different rules and regulations when it comes to divorce. In this video, Robert A. Bonavito, CPA, gives a brief overview of the divorce process in New Jersey. Getting a divorce can be complicated. Typically a forensic accountant needs to be involved if certain financial issues are to be resolved. Bonavito also discusses contested cases versus uncontested cases, child support, pendente lite motions, alimony issues, and division of marital property.

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Understanding Capitalization Rates for Valuing Companies

2015-06-01 09:32:56

New Jersey business valuation accountant Robert A. Bonavito, CPA, speaks on understanding capitalization rates. In this video, Robert will go through and explain what a capitalization rate is, how it relates to cash flow, and why it is important in valuing a company. Many managers who don’t understand what the capitalization rate is are actually destroying value rather than creating it. We will shed light on this.

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Litigation Support from a New Jersey Forensic Accountant

2015-05-18 12:44:34

Robert A. Bonavito, CPA, is a New Jersey forensic accountant who can help with any issue involving monetary damages. In this video, we will discuss the importance of having a forensic accountant to help prepare cases involving profit and loss claims, damage studies, appraisals, employee fraud, business valuations, marital dissolution, and criminal acts.

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Business Valuation: Understanding the Build Up Method

2015-05-04 13:10:18

New Jersey Forensic Accountant Robert A. Bonavito, CPA, speaks on the build-up method, which is a way to calculate the discount rate and, in turn, the capitalization rate. As an investor or manager of a company, whether it be a large corporation or small business, understanding how to develop a capitalization rate is one of the most important functions you will do. If you don’t know your businesses capitalization rate, you don’t know your business.

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NJ Accountant Discusses the History of Forensic Accounting

2015-03-30 09:29:22

In this video, New Jersey forensic accountant Robert A. Bonavito, CPA, discusses the history of accounting, dating all the way back to 3500 BC. Bonavito also talks about the Italian priest Luca Pacioli, who, in the 1400s-1500s codified the Venetian double-entry bookkeeping system that would change the world forever.

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Business Damages: Detecting Employee Fraud

2015-03-09 09:02:07

Employee fraud is responsible for billions of dollars of theft each year. In this video, New Jersey forensic accountant Robert A. Bonavito, CPA, discusses various fraud schemes, including embezzlement, cash and check schemes, accounts receivable fraud, inventory fraud, and fictitious disbursements.

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Important Tax Advice If You're Going Through a Divorce

2015-02-18 08:03:12

New Jersey divorce accountant Robert A. Bonavito, CPA, provides divorce tax advice. Divorce can be very expensive. In this video, we focus on various tax aspects of divorce, including how to protect tax deductions and tax planning that can easily save you over $30,000.

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Divorce and Stock Options - ISOs and NQSOs

2015-02-06 11:21:04

New Jersey Forensic Accountant Robert A. Bonavito, CPA, speaks on divorce and stock options. In this video, we focus mainly on the various types of incentive stock options (ISOs) and nonqualified stock options (NQSOs), with a discussion of two valuation methodologies for stock options, including the Callahan trust.

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New Jersey Divorce Accountant Speaks about CIS Statements

2015-01-05 13:32:00

New Jersey Divorce Accountant Robert A Bonavito, CPA, speaks on case information statements. This video focuses on the legal requirements for the case information statement (CIS) in a divorce. He goes through the various components of the CIS, including income and deductions listed on the form.

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New Jersey Forensic Accounting Services: Calculation of Lost Profits

2014-12-16 15:16:05

Lost profit calculation is a big area where forensic accounting services are in great need, need it be a tort case, breach of contract, or contract dispute. In this video, New Jersey forensic accountant Robert A. Bonavito, CPA, discusses two main methods used for calculating lost profits: the before and after method and the yardstick method.

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New Jersey Business Valuation Accountant: Performing Valuations

2014-12-03 13:11:16

In this video, New Jersey business valuation accountant Robert A. Bonavito, CPA, discusses the role of the business valuation analyst and the credentials and experience necessary to provide a credible value of a business. No two businesses are the same, and a firm understanding of accounting is very important. Bonavito also discusses the key aspects of performing a valuation.

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New Jersey Auditing Services: Business Fraud

2014-11-03 13:14:01

New Jersey Forensic Accountant Robert A Bonavito CPA, speaks on investigations of business fraud. This video focuses on business fraud including overstating revenues, management estimates, inventory problems, and other fraudulent financial reporting issues.

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Importance of New Jersey Lifestyle Analysis: Crews v. Crews

2014-10-13 14:35:05

New Jersey Forensic Accountant Robert A Bonavito, CPA, speaks on Alimony: Crews v. Crews. This video's focus is on marital standard of living and how it is essential to perform a proper New Jersey lifestyle analysis to substantiate changes in the original spousal support. The importance of proper documentation to substantiate or modify alimony in post divorce litigation.

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Stock Options, Restricted Stock or Portfolio Grants

2013-01-14 15:03:49

New Jersey Divorce Litigation:

Many of our divorce client have stock options, restricted stock or portfolio grants. One solution we have been implementing to properly evaluate the value is the Callahan Trust. These trusts have been very useful in assisting us with equitable distribution.

New Jersey Tax Services

2012-12-27 13:14:31

As congress and the president debate changes in the current law, one of the most devastating will be a change to the dividend tax rate.

New Jersey Litigation Services

2012-12-05 16:09:39

New Jersey Forensic Accountant, Robert A Bonavito CPA testified in the Essex County Superior Court on damages of over $75,000,000.

New Jersey Divorce Accountant

2012-11-19 15:19:12

New Jersey Divorce Accountant Robert A Bonavito invited to American Institutes of Certified Public Accountants headquarters In Raleigh Durham North Carolina for meeting to discuss National CFF standards.

Robert A Bonavito gearing up

2012-10-18 08:01:45

New Jersey forensic accountant Robert A Bonavito gearing up for two trials at Essex County Superior Court In Newark.

AICPA Nomination

2012-09-04 09:04:00

Bonavito accepts nomination by the American Institute of Certified Public Accountants for CFF Committee.

Robert A Bonavito Publishes “Top Ten Divorce Tax Issues”

2012-08-18 10:06:28

In dealing with matrimonial issues for twenty five years, I have seen these ten tax areas overlooked. Questions or comments on this article can be e-mailed to robert@rabcpafirm.com.

Successful Testimony at Superior Court of New Jersey

2012-07-26 15:02:37

Robert A Bonavito, CPA successfully testifies as an expert at the Superior Court of New Jersey , before The Honorable Judge Andrea Carter

Mr. Bonavito Becomes Chartered Global Management Accountant

2012-06-25 15:03:33

Robert A. Bonavito, CPA PC becomes a Chartered Global Management Accountant (CGMA)