Chapter 15
Critical Thinking Q&A
How many outs are there in an inning?
Review Questions & Answers
15-1. What is the purpose of practice aids in forensic and valuation services?
Answer: Practice aids offer general guidance for forensic and valuation services but do
15-2. What are the different types of consulting and litigation support activities for fraud and
forensic professionals?
Answer: These professionals obtain evidence, interview witnesses, write reports and
15-3. What is included as an expert’s work product?
Answer: Work product includes not only the expert’s report and main analyses but all
15-4. What must an injured party prove to be successful in a claim for damages?
Answer: Generally, in order to successfully pursue a claim for legal damages, the injured
party must prove two points:
15-5. What are the different types of commercial damages?
Answer: Successful plaintiffs may be awarded several different types of damages:
15-6. What are the various categories and calculations used in ratio analysis?
Answer: Ratios are normally categorized as liquidity, profitability, efficiency or capital
structure ratios. The categories, specified in AICPA Practice Aid 06-3, Analyzing
Financial Ratios, include:
15-7. What are some of the decisions that need to be made with regard to quantifying lost
revenues and increased expenses?
Answer: Some of the decisions include:
• The base amount of revenues or expenses, usually based on historical experience.
15-8. How may lost profits be calculated using typical benchmarks?
Answer: Typical benchmarks to calculate lost profits may include:
15-9. What are the considerations related to forecasting income and cash flows?
Answer: When forecasting income and cash flows, the forensic professional should
consider:
15-10. What types of damages may ensue as a result of personal injury, wrongful death and
survival actions?
Answer: There are three types of damages that may ensue as a result of personal injury,
wrongful death and survival actions. They are: losses to the individual, losses to survivors
and losses to the estates of decedents.