Robert A. Bonavito, CPA PC

Divorce Series Part 3: Understanding The Case Information Statement (CIS)

My name is Robert Bonavito, New Jersey Forensic Accountant. This video is part of a series of videos where I discuss forensic accounting topics for educational purposes only. If this was a litigated matter, I would take a different approach, have different conclusions based on different facts.

Hi, everyone. Welcome to part three of the matrimonial series we're doing. Today we're going to talk about some of the stuff that attorneys do, non-financial outcomes, and also we're going to discuss the Case Information Statement, which is pretty interesting. So, let's start. So, let's talk about some of the things that happen in a divorce. Remember, a forensic accountant, things I mainly focus on, you know, equitable distribution, alimony, child support, and forensic accounting valuations, but there's a lot of other stuff going on, right? Because I'm focused on what? The money, right? The money.

But the attorneys and others are dealing with a lot of other stuff, and that stuff includes, you know, dealing with the custody of the child, they also have issues with DV, domestic violence. A lot of times they have to bring in psychologists, you know, to help with issues. And I had a case where a woman who just had a baby and she was getting divorced and her husband was a high net worth executive and she was a stay-at-home with...she had five kids and she just had a baby, but they both had masters' and both very smart. But in a divorce, you know, the woman was going to go back into the workforce, but how do you account for her income? You'd have to...what's called attribution. You have to find out and hire... The attorneys had to hire a vocational expert to evaluate how much she was going to make.

Obviously, the husband was working for a Fortune 500 company for 30 years, and just by the mere fact of being there, you make a lot of money. It doesn't, you know, maybe you're good, maybe you're not, but as you move up the ranks, you get paid more. She would have to start at the bottom, even though she may be more qualified, more intelligent. So, there's a lot of things in divorce that don't have to do with the financial issues and these are things that are extremely important, and many times more important, you know, the welfare of the children, you know, where are you going to live, that type of stuff. Who sees the child when? What about college education? What kinds of, you know.

And psychologists seem to be a big part of this, but as a forensic accountant, we don't usually get involved in those issues but they exist and you should be aware of that. But the one thing we are involved in heavily is the Case Information Statement.

And the Case Information Statement, I would say, is one of the most important documents in a divorce. Everybody uses it. Attorneys use it, judges use it, and it's often the basis of negotiation with child support, alimony, equitable distribution, all that good stuff. And the CIS, is what we refer to it, is broken down into three main sections: income, current monthly expenses, and assets and liabilities. Now, how does this get created? It's always interesting. Usually what happens is someone will decide to get divorced, they'll go see a divorce attorney, the divorce attorney will explain the divorce to them, and then will hand them the CIS and say, "Here. Go home and fill this out."

And the client is looking at him and saying, you know, "I don't deal with this at all. I don't really have anything to do with this. I don't understand the finances." Then he'll say, "Listen, go home and fill it out the best you can." They'll come back, the attorney will look at it. He'll call up a forensic accountant if there's issues. We had a client who said they spent $8,000 every two weeks on food and they go out to dinner and they have two kids and the husband's never there. And I was like, "How could that possibly be?"

Well, you know, they didn't really have receipts to back it up. So, sometimes people have these things, they put these things down, but they don't really understand where they come from. And that's our job is to figure out does this make sense? You know, there was a cash business in that case and I think what happened was when it was being filled out, they were assuming they had a back end to the cash number that we discovered. And that wasn't the case because this should be as accurate as possible based on as best information as possible.

Because, like I said, everybody relies on it. And years ago when we started doing this, 20, 30 years ago, we'd go through all the bank statements, but now a lot of people have QuickBooks and Quicken and you can compile it and it's a lot easier. But let's take a look at this Case Information Statement. Here you see a case of probation statement, this was redesigned five or six years ago. And here's, you know, basically, information, a docket number and here's the instructions that come with it. And you could see they ask for tax returns and that kind of stuff.

And here's the date of the statement. When was this given? Because in complex divorces we'll have four or five of these. I'll have three or four for the wife, three or four for the husband or, you know, the moneyed spouse, non-moneyed spouse. And here you have the birth dates. This is important, date of complaint because a lot of the assets are going to be valued as of that date, the name to the children, so you can get a good idea of what's going on. Here is the income information, which is where we really shine. Okay? And you can see that they want a breakdown of the income because a lot of times if it's a W2 employee at a big company, what appears on a W2 is not what appears on the tax return. There's all kinds of interesting stuff going on.

And there could be deferred comp, things like that. You've got to reconcile, you have to understand it. You've got to be able to break everything. Now, this is pretty detailed. You can see they have union dues and all that good stuff here. Right? And let's go to the next section here. Here we have the monthly expenses. And this is critical. This is so important because this establishes the lifestyle. Okay? And because we're a court of equity in New Jersey, the goal is to maintain that lifestyle, whatever it is. If it's $50,000 a week, she, you know, and you don't need that to live on, but that's your lifestyle, that's what you should have. And this is why this is so important. And this, again, is very detailed. All kinds of stuff, you know, renters insurance, cable TV bill, and we love to really go through this and do a real thorough job on it.

And here's the second page you could see there's, like, vacations, all that stuff needs to be put in here. And then, the last section is the assets and liabilities, right? This is where all the pensions should be and all that good stuff, the house value, the real estate mortgage. And the way we look at the CIS is that the way we look at a business financial statement, right? You have the income statement, you have a balance sheet, and you have a cash flow statement, and they all have to be tied together. And it's important that you have the backup.

And like I said, we'll have five or six of these in some cases, but extremely important, most of my time would be put into the CIS statement because I think it's that important. And we went through it quickly, but since this is on YouTube, you can slow it down and go through it and listen, guys, if you have any questions on this, just leave a comment below on my YouTube channel, one of my analysts or I will get back to you. We answer every single question, good or bad, we answer them. So, hopefully, you enjoyed this quick overview of nonfinancial issues and the CIS statement. Thanks.

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