Accountants and the Income & Expense Declaration

In nearly every family law matter a financial disclosure form, known as the Income and Expense Declaration (“FL-150”), must be filed by both parties and submitted to the court. It is a combination financial report, dominated by its profit & loss information, with a smattering of balance sheet data. The purpose of FL-150 is to assist the court in ascertaining the financial needs, obligations and income of the parties to assist in the determination of various areas of support or financial awards. In many cases, parties and their attorneys enlist a professional accountant and, in light of the depth of education and training obtained by most accountants, the function of the family law Income & Expense Declaration may seem simple.
However, the role an accountant will play respecting the FL-150 will depend on if he/she is helping the client prepare the FL-150, or is a forensic accountant retained to help the client win their family law case.  Without intending to minimize the duties imposed on accountants in any financial role they fill, preparation of the FL-150 is a matter more akin to bookkeeping than to strategic litigation analysis. In the instance the client is self-employed, the client-accountant interface may involve sophistication beyond mere bookkeeping. Questions of cash receipt tracking or “business expenses” that could be characterized as perquisites may significantly impact the content of the profit & loss statement or IRS Schedule C attached to the FL-150. These issues may also apply to entries in Item 6.b. (Rental property income).
While much of the FL-150 is just applied arithmetic, do not relax into thinking calculation mistakes or omitted data are innocuous. Many appellate decisions involve seemingly innocent errors, where the trial court, wrongly or rightly, cited them as a basis for its financial awards. Learning the import of those deficiencies from appellate justices usually creates very unhappy clients. Thus, an experienced family law firm can provide the resources and guidance to assist clients in successfully addressing financial complexities.
For more information about family law matters, contact The Reape-Rickett Law Firm at 661-288-1000 or visit our website, www.DivorceDigest.com.