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Labelmakers Case


A forensic accountant’s role in a civil action is usually to draw out information from accounting records and establish relevant facts (Fenton & Isaacs, 2012). In the Labelmakers Group Pty Ltd v LL Force Pty Ltd case two forensic accountants were engaged by each party to examine relevant records and provide reports. They were required to calculate the profit margin, discount rate, loss of profit on paper sales and accounts of profits. The profit margin was calculated to identify losses of sales revenue and to indicate the impact of clients transferring their business away. The discount rate was calculated to be applied in calculating the quantum of the applicant’s losses as a result of the respondents misconduct in order to assist in recognising the resulting damages of each party. The loss of profit on paper sales was calculated to identify the implications of lost business on paper quantity ordered and the revenue from these sales.  Under the accounts of profits, net profit was compared to the profits attributable to the former clients for easy comparison. Capital profits were also calculated to establish the investment gain through shares in LL Force (Labelmakers Group Pty Ltd v LL Force Pty Ltd, 2013).

In a case where both parties believe the other is in the wrong, I believe it is critical for a forensic accountant to be impartial to all involved. An ethical forensic accounting process must be unbiased to increase the chances of a successful outcome (Shapiro, 2015). Accountants must follow fair guidelines in their nature, timing, documentation and communication of results to enable more creditable and high-quality decisions to be made (Shapiro, 2015).


References


Fenton Jr, E. D., & Isaacs, P. (2012). Preparing Deposition Questions: The Critical Role of the Forensic Accountant. Journal of Forensic & Investigative Accounting, 4(1). 
Labelmakers Group Pty Ltd v LL Force Pty Ltd (No 3) [2013] FCA 1059

Shapiro, D. M. (2015, September 2). FORENSIC ACCOUNTING: BEYOND THE COURTROOM. 
Retrieved from Strategic Finance: https://sfmagazine.com/post-entry/september-2015-forensic-
accounting-beyond-the-courtroom/

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