What Solicitors Should Include in a Letter of Instruction to a Forensic Accountant

A clear letter of instruction can help a forensic accountant understand the purpose of an engagement, the financial questions to be considered and the scope of the work. In disputes and other legal proceedings, well-defined instructions can also help establish which financial issues require analysis and what information may be relevant.

The appropriate contents of a letter of instruction will depend on the circumstances of the matter. A commercial dispute involving a loss of profits claim may require different information from a shareholder dispute involving a business valuation. Solicitors considering the wider scope of forensic accounting services may also need to identify which specific financial questions fall within the proposed engagement.

This guide outlines information solicitors may wish to consider when instructing a forensic accountant.

1. Explain the Background to the Matter

The instructions should provide enough background for the forensic accountant to understand the financial issues without requiring the history of the dispute to be reconstructed from the documents alone.

This may include:

• The identities and roles of the relevant parties
• The nature of the dispute
• The relevant contractual or commercial relationship
• Key events leading to the dispute
• Relevant dates and periods
• The stage reached in the proceedings
• The financial issues requiring consideration

Where appropriate, the background should distinguish between established facts, matters alleged by a party and issues that remain disputed.

A forensic accountant's role will generally concern financial and accounting issues within the agreed scope of the engagement. Providing relevant context can help clarify the financial questions that arise from the dispute.

2. State the Purpose of the Instruction

The letter should explain why the forensic accountant is being instructed.

Depending on the circumstances, the engagement might involve:

• Assessing a claimed financial loss
• Reviewing financial records
• Considering a business valuation
• Analysing financial evidence
• Investigating specified financial transactions
• Assessing the financial effect of an alleged breach
• Preparing an expert report
• Reviewing questions arising from another expert's analysis

The purpose should be stated as clearly as reasonably possible. A broad instruction such as "review the financial position" may leave uncertainty about which financial matters are within scope.

Where the engagement relates to expert evidence, the role of the forensic accountant should also be distinguished from legal questions that are for the court or legal representatives to address.

3. Set Out the Questions to Be Addressed

Specific questions can help define the financial analysis expected from the forensic accountant.

The questions will depend on the nature of the dispute.

Loss and Damages

Where a financial loss is being considered, the instructions may address questions such as:

• What financial loss is being claimed?
• What period does the claim cover?
• What assumptions underpin the calculation?
• Which financial records support the calculation?
• Are alternative approaches to quantifying particular elements of loss required for consideration?

Business Valuation

For a business valuation assignment, the instructions may identify:

• The business or business interest to be valued
• The relevant valuation date
• The valuation basis to be considered
• The financial information available for review
• Particular valuation issues requiring analysis

Financial Transactions

Where particular transactions are relevant, the instructions may specify:

• Which transactions require examination
• The period to be reviewed
• Particular payments, transfers or accounting entries requiring consideration
• Supporting documentation available for review

The questions should reflect the actual financial issues in the proceedings rather than asking the forensic accountant to address matters outside the intended scope of the engagement.

4. Identify the Relevant Financial Records

The letter should identify documents already available and, where appropriate, indicate what additional financial information may be relevant.

Depending on the matter, this could include:

• Annual accounts
• Management accounts
• General ledgers
• Trial balances
• Budgets and forecasts
• Bank statements
• Invoices and purchase records
• Sales records
• Payroll information
• Tax records
• Contracts and amendments
• Financial models
• Valuation materials
• Previous expert reports
• Relevant correspondence
• Transaction records

The documents required will vary between cases. It can therefore be useful to distinguish between documents already provided and categories of information that may become available later.

If records are incomplete or unavailable, this can also be identified in the instructions where known.

5. Specify Relevant Dates and Periods

Financial analysis may depend on particular dates and accounting periods.

Where relevant, the instructions may identify:

• The date of the alleged breach or event
• The period before the relevant event
• The claimed loss period
• The valuation date
• Relevant accounting periods
• The date of a transaction under consideration
• Other dates relevant to the financial analysis

Clearly identifying the relevant periods can help avoid uncertainty about the timeframe the forensic accountant is being asked to examine.

6. Define the Scope and Any Known Limitations

The letter should make clear what the forensic accountant has and has not been asked to consider.

For example, the work may be limited to:

• A particular financial issue
• A defined period
• Specific entities or business interests
• Certain transactions
• A particular valuation question
• A specified loss calculation

Known limitations should also be identified where appropriate. These could include incomplete records, missing financial information or restrictions on access to particular documents.

Where available evidence is incomplete, identifying that limitation at the outset can help clarify what information is available for the analysis.

7. Provide Relevant Procedural Information

The forensic accountant should receive information about the legal and procedural context that is relevant to the engagement.

Depending on the circumstances, this may include:

• Whether the accountant is being instructed as an expert
• Whether an expert report is required
• Relevant procedural requirements or directions
• Known deadlines for reports or responses
• Whether another expert has already been instructed
• Whether a joint expert appointment is being considered

Providing this information can help clarify the intended scope and nature of the engagement.

The solicitor should provide relevant procedural information rather than assuming that the forensic accountant will have access to the complete procedural history of the case.

8. Identify Other Experts and Relevant Reports

Where other experts are involved, the instructions should identify them and explain, where relevant, how their work relates to the financial issues under consideration.

Depending on the matter, other experts may include:

• Valuation experts
• Quantity surveyors
• Delay experts
• Industry specialists
• Accountants instructed by another party

Relevant reports, calculations or instructions may need to be provided where they form part of the agreed scope of the forensic accountant's work.

For example, a forensic accountant may be asked to consider financial assumptions or figures prepared by another expert where that review falls within the agreed assignment.

9. Specify the Required Deliverable

The solicitor should explain what output is required from the forensic accountant.

This might include:

• An expert report
• A preliminary financial analysis
• A valuation report
• A loss calculation
• A review of another party's calculations
• A response to questions concerning financial evidence
• Assistance with questions for another expert

If a formal expert report is required, the instructions may identify known requirements concerning its scope, format and deadline.

The required deliverable should correspond with the purpose of the instruction and the financial questions the accountant has been asked to address.

10. Identify Key Assumptions and Disputed Financial Issues

Where the parties disagree about particular financial matters, those issues should be identified where relevant to the forensic accountant's work.

For example, there may be disagreement concerning:

• Revenue figures
• Cost assumptions
• Forecast performance
• Accounting treatment
• Business valuation methodology
• The appropriate loss period
• The effect of a particular transaction
• The financial effect of an alleged event

Identifying these issues can help the forensic accountant distinguish between matters requiring financial analysis and factual or legal questions that fall outside the agreed accounting role.

11. Include Relevant Deadlines and Case Milestones

The instruction should include known deadlines that may affect the engagement.

These could include:

• The date by which an expert report is required
• Exchange dates
• Court hearings
• Meetings of experts
• Mediation dates
• Disclosure deadlines
• Deadlines for responding to another expert's report

Providing these dates at the beginning can help establish the expected timetable for the work and identify whether further information may be needed before a particular deadline.

12. Clarify Any Uncertain Areas of Scope

Instructions do not necessarily need to anticipate every issue that may arise during an engagement. However, significant uncertainties about scope can be identified at an early stage.

Clarification may be useful where:

• The financial question is too broad
• The relevant period is unclear
• The available records do not correspond with the proposed analysis
• The requested work may extend beyond the accountant's area of expertise
• The role of the accountant is unclear
• The instructions appear to combine financial analysis with legal judgment

Resolving these points can help establish what the forensic accountant is being asked to analyse and what falls outside the engagement.

A Practical Structure for a Letter of Instruction

A solicitor may find it useful to structure a letter of instruction under headings such as:

1. Background
2. Purpose of the instruction
3. Questions to be addressed
4. Relevant dates and periods
5. Documents provided
6. Further information expected
7. Scope and limitations
8. Procedural context
9. Other experts and relevant reports
10. Required deliverable
11. Reporting deadline
12. Key contact details and arrangements

The appropriate structure will depend on the circumstances of the individual matter.

Conclusion

A letter of instruction to a forensic accountant can set out the background to a dispute, the financial questions requiring consideration, the relevant evidence and the expected deliverable.

For solicitors, it can be useful to distinguish financial questions from disputed factual matters and legal issues. Identifying relevant documents, dates, assumptions, procedural information and deadlines can also help establish a clear scope for the engagement.

The instruction should ultimately be tailored to the particular matter and the role the forensic accountant is expected to perform.

Where a solicitor is considering a forensic accounting instruction, further information can be obtained by contacting Sterling Forensic.

Disclaimer: This article provides general information only and is not legal or accounting advice. The appropriate scope and form of expert instructions will depend on the circumstances of the individual matter and any applicable procedural requirements.

Last Reviewed: September 2026