From Investigation to Quantification

Once fraud or breach has been identified, the forensic accountant must quantify damages. This requires building financial models, making assumptions, and presenting calculations that can withstand cross-examination. AI accelerates model building and testing while the forensic accountant provides the professional judgment that makes the analysis credible.

Lost Profits Calculation

LOST PROFITS ANALYSIS:

CONTEXT: [Plaintiff] alleges that [Defendant's] actions caused
lost profits from [start date] to [end date].

HISTORICAL FINANCIAL DATA:
- Revenue: [3-5 years of monthly/quarterly revenue prior to
  the harm period]
- Costs: [Variable and fixed cost structure]
- Growth trends: [Historical growth rates, industry benchmarks]
- Market conditions: [Relevant industry and economic data]

MODEL:
1. "BUT-FOR" SCENARIO: Project what revenue and profits would
   have been absent the defendant's actions
   - Use historical trends, industry growth, and comparable
     company performance
   - Apply multiple projection methods (trend analysis,
     regression, market share)

2. ACTUAL SCENARIO: Document actual revenue and profits during
   the damage period

3. LOST PROFITS: Calculate the difference between but-for and
   actual scenarios

4. SENSITIVITY ANALYSIS: Show how results change under different
   assumptions:
   - Conservative growth rate vs. optimistic
   - Different cost structure assumptions
   - Alternative damage period start/end dates