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Cornerstone Research - Practices

Research on Accounting Class Action Filings and Settlements

Cornerstone Research’s new report finds that the number of securities class action filings that included accounting allegations (47) remained relatively constant in 2013 compared with 2012, but the market capitalization losses associated with these filings more than doubled. During that same period, the number of accounting case settlements went up, but remained low compared with the 10-year historical average.

Auditor Liability

Our consultants have experience with a range of auditor liability issues in the context of litigation and SEC and Public Company Accounting Oversight Board (PCAOB) matters. We have addressed auditor independence, the responsibilities of management and auditors, and the nature, scope, and purpose of an audit or quarterly review. We have determined whether audit and review procedures complied with Generally Accepted Auditing Standards and PCAOB standards and assessed the effectiveness of audits of internal controls over financial reporting.

Causation and Damages

In cases with accounting allegations, we have evaluated class certification, market efficiency, loss causation, and damages issues. We also have used accounting data to estimate possible settlement outcomes.

GAAP Compliance and Forensic Accounting

Cornerstone Research has advised counsel and worked with testifying experts to address a wide variety of Generally Accepted Accounting Principles (GAAP) compliance and forensic accounting issues. In evaluating GAAP compliance, we have addressed a broad range of topics that include revenue recognition, fair value measurements, the timing and amount of asset write-offs, and contingent liabilities.

Tax Controversies

We have consulted with attorneys in disputes with the U.S. government and commercial litigation involving a variety of tax controversy issues. For example, we have evaluated the fundamental requirements for tax-advantaged transactions to be sustained if challenged by the IRS or by the courts. We have also analyzed complex company structures and derivative transactions to determine whether there was sufficient potential in these entities for economic benefit.

Cost Estimation and Profitability Analysis

Cornerstone Research has provided consulting and expert testimony in investigations, litigation, and regulatory matters involving complex cost estimation and profitability analyses. In connection with this work, we have addressed both liability and damages issues. We have determined appropriate measures of lost profits and disgorgement of unjust enrichment in intellectual property matters.