Methodological Deficiencies in the Expert Testimony of Forensic Accountants: A Qualitative Content Analysis of Judicial Statements Pertaining to Daubert Exclusions

The thematic categories of deficiencies were interconnected in ways not explicitly expressed in the Federal Rules of Evidence.

“Further, these thematic categories were interconnected in ways not explicitly expressed in the Federal Rules of Evidence.”

• AssumptionRests on an assumption: In federal courts, judges primarily use the Daubert standard to exclude expert testimony.

Judges primarily excluded forensic accountant testimony based on deficiencies in evidence, methods, and reasoning.

“Judges primarily excluded testimony based on deficiencies in evidence, methods, and reasoning.”

Among the primary codes, deficient evidence, deficient methods, and deficient reasoning were the reasons that judges cited most frequently when choosing to disallow forensic accountant testimony.

“Among these primary codes, (a) deficient evidence, (b) deficient methods, and (c) deficient reasoning were the reasons that judges cited most frequently when choosing to disallow forensic accountant testimony.”

In one case, imagined evidence was an instance of both deficient evidence and faulty assumption.

“Additionally, in one case, imagined evidence was an instance of both deficient evidence and faulty assumption (Hans v. Tharadlson, 2011).”

• cites Hans v. Tharadlson, 2011Not matched

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Thirty-six judicial statements were coded as expressing perceptions of deficient methods.

“Thirty-six judicial statements were coded as expressing perceptions of deficient methods.”

Faulty assumption was a major sub-code related to problems with deficient reasoning.

“Faulty assumption formed another major sub-code related to problems with deficient reasoning.”

Yet another type of deficient method occurred when the judge deemed the method rudimentary to the extent that no specialized knowledge or skill would be required to conduct an analysis.

“Yet another type of deficient method occurred when the judged deemed the method rudimentary to the extent that no specialized knowledge or skill would be required to conduct an analysis.”

Analysis of methodologically related reasons that judges excluded FA testimony revealed three primary categories of exclusion: deficient evidence, deficient methods, and deficient reasoning.

“Analysis of the methodologically related reasons that judges excluded the testimony of FAs revealed the following three primary categories of exclusion: (a) deficient evidence, (b) deficient methods, and (c) deficient reasoning.”

• AssumptionRests on an assumption: Judicial statements in written opinions accurately reflect the reasons judges exclude expert testimony.

Deficient evidence displayed associations with other primary and secondary codes, including faulty assumptions, lack of relevance, irrelevant data, and deficient reasoning.

“Deficient evidence also displayed associations with other primary and secondary codes, including faulty assumptions, lack of relevance, irrelevant data, and deficient reasoning.”

The third most common reason for rejecting FA testimony as it relates to methodology was the failure of FAs to reason logically toward a sound conclusion.

“The third most common reason for rejecting FA testimony as it relates to methodology was the failure on the part of FAs to reason logically toward a sound conclusion.”

Content analysis of judicial statements revealed nine sub-codes associated with methodological deficiencies: deficient evidence, deficient methods, deficient reasoning, lack of relevance, faulty assumptions, reference, subjectivity, standards of control, and peer-reviewed status.

“Content analysis of judicial statements revealed nine sub-codes associated with methodological deficiencies. They were as follows: (a) deficient evidence, (b) deficient methods, (c) deficient reasoning, (d) lack of relevance, (e) faulty assumptions, (f) reference, (g) subjectivity, (h) standards of control, and (i) peer-reviewed status.”

In Silicon Knights, Inc. v. Epic Games, Inc. (2011), the absence of facts did not support an assumption.

“Finally in Silicon Knights, Inc. v. Epic Games, Inc. (2011) the absence of facts did not support an assumption.”

• cites Silicon Knights, Inc. v. Epic Games, Inc. (2011)Not matched

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Insufficient evidence was another frequent interconnected code.

“Finally, insufficient evidence was another frequent interconnected code.”

Often applied methods that were based on insufficient evidence were perceived as deficient.

“Often applied methods that were based on insufficient evidence were perceived as deficient.”

Faulty assumption was most frequently tied to relevancy.

“Faulty assumption was most frequently tied to relevancy.”

According to statements made by judges, FA testimony must express a coherent argument both in the FA's report and verbally.

“According to statements made by judges, FA testimony must express a coherent argument both in the FA's report and verbally.”

Faulty assumption was linked to a wide range of sub-codes, including absence of facts, insufficient data, relevance, and unreliability of methods.

“It was linked to a wide range of sub-codes, including absence of facts, insufficient data, relevance, and unreliability of methods.”

Absence of method, unreliability, and non-specialized methods were the most frequent sub-codes that informed the primary code of deficient methods.

“Absence of method, unreliability, and non-specialized methods were the most frequent sub-codes that informed the primary code.”

Problems associated with logical reasoning formed a major category of judicial perception.

“In addition, problems associated with logical reasoning formed a major category of judicial perception.”

The most often cited reason judges disallowed forensic accountant testimony was deficient evidence.

“The most often cited reasons judges disallowed forensic accountant testimony was deficient evidence.”

Deficient evidence was most often marked by being insufficient, absent, irrelevant, or inaccurate.

“Deficient evidence was most often marked by being insufficient, absent, irrelevant, or inaccurate.”

The most frequent interrelated code was faulty assumption.

“The most frequent interrelated code was faulty assumption.”

Faulty assumption appeared to intertwine with unreliability of method.

“Elsewhere, faulty assumption appeared to intertwine with unreliability of method.”

The reasons related to methodology that judges use to exclude expert testimony are multifaceted.

“This research suggests that forensic accountants functioning as expert witnesses should be cognizant that the reasons related to methodology that judges use to exclude expert testimony are multifaceted.”

The results of this investigation suggest that Daubert exclusions based on methodological inadequacies, as perceived by judges, in the expert testimony of forensic accountants corresponded to three primary themes: deficient evidence, deficient methods, and invalid reasoning.

“The results of this investigation suggest that Daubert exclusions based on methodological inadequacies, as perceived by judges, in the expert testimony of forensic accountants corresponded to three primary themes: (1) deficient evidence, (2) deficient methods, and (3) invalid reasoning.”

• AssumptionRests on an assumption: The set of judicial opinions analyzed is representative of Daubert exclusions of forensic accountants in U.S. courts.
• AssumptionRests on an assumption: Judicial statements in written opinions accurately reflect the reasons judges exclude expert testimony.

When judges cited methods and being absent, they often cited lack of evidence.

“When judges cited methods and being absent, for example, they often cited lack of evidence.”

This research suggests that these concepts do not function in isolation.

“This research suggests that these concepts do not function in isolation.”

Deficient reasoning, particularly false assumptions, was associated with deficient methods or deficient evidence.

“Additionally, deficient reasoning, particularly false assumptions, was associated with deficient methods or deficient evidence.”

Evidence, method, and reasoning are intertwined.

“Evidence, method, and reasoning are intertwined.”

Methodology based on exclusions revolved around the three central concepts of evidence, methods, and reasoning.

“Methodology based on exclusions revolved around the three central concepts of evidence, methods, and reasoning.”

Judges will often partially exclude forensic accountant testimony when forensic accountants attempt to interpret the law, draw legal conclusions of liability and guilt, and interpret the psychological intentions of defendants.

“Judges will often partially exclude forensic accountant testimony when forensic accountants attempt to interpret the law, draw legal conclusions of liability and guilt, and interpret the psychological intentions of defendants (Crumbly & Cheng, 2014).”

• cites Crumbly & Cheng, 2014Not matched

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Out of 224 Daubert challenges in 2019, approximately 37% (83) resulted in partial or full exclusion of financial expert witnesses' testimony.

“Indeed, out of 224 Daubert challenges in 2019, approximately 37% (83) resulted in partial or full exclusion of financial expert witnesses' testimony.”

• cites PWC, 2020Not matched

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From 2000 to 2019, judges excluded the testimony of financial experts at a rate of 33%.

“According to PCW, from 2000 to 2019, judges have excluded the testimony of financial experts at a rate of 33%.”

• cites PWC, 2020Not matched

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Judges are particularly sensitive to bias.

“According to DiGabriele (2020DiGabriele ( , 2011)), judges are particularly sensitive to bias, and forensic accountants often underestimate their level of objectivity.”

• cites DiGabriele, 2020 sourceNot checked — no full text of the source
• cites DiGabriele, 2011Not matched

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Content analysis of the language of judges reveals a more complex and nuanced perceptual dynamic for reasons of exclusion.

“Content analysis of the language of judges reveals a more complex and nuanced perceptual dynamic for reasons of exclusion.”

Judges determine whether a given method is a product of expert or lay analysis.

“Judges determine whether a given method is a product of expert or lay analysis.”

Researchers do not identify the reasons for forensic accountant expert testimony disallowance.

“Although Meuhlman et al. (2012) indicate the 46% is too high and Fradella et al. (2004) describe judges as hostile to FA expert testimony regarding damage calculation, researchers do not identify the reasons for FA expert testimony disallowance.”

• cites Meuhlman et al., 2012Not matched

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• cites Fradella et al., 2004Not matched

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The current research suggests the lack of sufficient data and unacceptable methods are too generalized a description to be very useful.

“The current research suggests the lack of sufficient data and unacceptable methods are too generalized a description to be very useful.”

Absence of method is associated with absence of evidence.

“Absence of method is thus associated with absence of evidence.”

If a non-expert can conduct the analysis, then the judge may very well evaluate the method as unprofessional and requiring no special knowledge particular to forensic expertise.

“It does mean that if a non-expert can conduct the analysis, then the judge may very well evaluate the method as unprofessional and requiring no special knowledge particular to forensic expertise.”

From 2000 to 2019, of the 2,842 Daubert challenges brought against financial expert witnesses, 929 cases resulted in partial or complete exclusion.

“From 2000 to 2019, of the 2,842 Daubert challenges brought against financial expert witnesses, 929 cases resulted in partial or complete exclusion (PWC, 2020).”

• cites PWC, 2020Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

Forensic accountants often underestimate their level of objectivity.

“According to DiGabriele (2020DiGabriele ( , 2011)), judges are particularly sensitive to bias, and forensic accountants often underestimate their level of objectivity.”

• cites DiGabriele, 2020 sourceNot checked — no full text of the source
• cites DiGabriele, 2011Not matched

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Defendants, including individuals and businesses, may suffer when the forensic accountant lacks the necessary competencies to convince judges to hear FA testimony.

“Defendants, including individuals and businesses that require that forensic expert witness testimony be effective may suffer when the FA lacks the necessary competencies to convince judges to hear FA testimony (DiGabriele, 2008a;Folami et al., 2013).”

• cites DiGabriele, 2008a sourceNot checked — no full text of the source
• cites Folami et al., 2013Not matched

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Thirty-four cases involving Daubert exclusions where judges based their exclusions on methodological flaws in the testimony of forensic accountants were analyzed using qualitative content analysis.

“Thirty-four cases involving Daubert exclusions where the judges based their exclusions on methodological flaws in the testimony of forensic accountants were analyzed using qualitative content analysis.”

The exclusion rate for forensic accountants was 46% from 1982 to 2010.

“Meuhlman, Burnaby, and Howe (2012) determined the exclusion rate for forensic accountants was 46% from 1982 to 2010.”

• cites Meuhlman, Burnaby, and Howe, 2012Not matched

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Judges have allowed individuals who were not forensic accountants or certified public accountants to testify as financial expert witnesses.

“Additionally, judges have even allowed those who were not forensic accountants or certified public accountants to testify as financial expert witnesses despite the fact that Daubert specifically tasks judges with making sure expert witnesses are qualified (Jurs & DeVito, 2013).”

• cites Jurs & DeVito, 2013Not checked — no full text of the source

Judges and juries base their decisions partly on the information presented by forensic accountant expert witnesses.

“In addition, judges and juries base their decisions partly on the information presented by FA expert witnesses (Crumbley & Cheng, 2014;Crumbley, Heitger, & Smith, 2005).”

• cites Crumbley & Cheng, 2014 sourceNot checked — no full text of the source
• cites Crumbley, Heitger, & Smith, 2005Not matched

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If forensic accountant expert witness testimony is disallowed, then judges and juries may receive incomplete or poor information from which to make inferences.

“If FA expert witness testimony is disallowed, then judges and juries may receive incomplete or poor information from which to make inferences (Crumbley et al., 2013).”

• cites Crumbley et al., 2013Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

The first methodological criteria of Daubert, whether the testimony is grounded in fact, corresponds to theme 1, deficient evidence.

“The first methodological criteria of Daubert, namely, whether the testimony is grounded in fact corresponds to theme 1, namely, deficient evidence.”

Daubert does not specifically exclude testimony that is characterized by circular reasoning or is based on faulty assumptions.

“That is, for example, Daubert does not specifically excluded testimony that is characterized by circular reasoning or is based on faulty assumptions.”

• cites Federal Rules of Evidence, 2007Not matched

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The final criteria, whether the expert has analyzed the facts using the methods correctly, appears also to correspond to theme 2.

“The final criteria, whether the expert has analyzed the facts using the methods correctly appears also to correspond to theme 2.”

Methodological related exclusions mapped fairly accurately onto the Daubert standard.

“Unsurprisingly, methodological related exclusions mapped fairly accurately onto the Daubert standard.”

Deficient evidence and deficient methods are not necessarily categorically distinct.

“That is, they are not necessarily categorically distinct.”

This was particularly true for the concepts of evidence and methods when comparing the language of Daubert with the language expressed by federal judges.

“This was particularly true for the concepts of evidence and methods when comparing the language of Daubert with the language expressed by federal judges.”

Deficiencies in FA reasoning, which were perceived as being grounds for exclusion, are not specifically covered in the language of Daubert.

“However, deficiencies in FA reasoning, which were perceived as being grounds for exclusion, are not specifically covered in the language of Daubert.”

Daubert criteria can be directly mapped onto the first two of these three themes.

“Daubert criteria can be directly mapped onto the first two of these three themes.”

Only one sub-code that informed theme 3, namely, conclusion unsupported by facts, appears to be related to the third criterion of Daubert.

“However, only one sub-code that informed theme 3, namely, conclusion unsupported by facts, appears to be related to the third criterion of Daubert.”