Guidance Note for Forensic Accounting and Investigation Standard No. 360 on Testifying Before a Competent Authority provides assistance to Testifying Professionals (TPs) in preparing and giving testimony before Competent Authorities, ensuring compliance with the Standard. The objective is to maintain the TP’s credibility, engage effectively with the Competent Authority, share relevant information and evidence, and dedicate sufficient time and attention to the testimony. The guidance note also offers examples and illustrations to support TPs in applying appropriate work procedures based on the specific requirements of the assignment.
Digital Accounting Assurance Board
The Institute of Chartered Accountants of India
1st June, 2023
GUIDANCE NOTE FOR FORENSIC ACCOUNTING AND INVESTIGATION STANDARD NO. 360 ON TESTIFYING BEFORE A COMPETENT AUTHORITY
EXPOSURE DRAFT Approved by DAAB (On 1 June’23)
This Guidance Note provides technical clarifications and implementation guidance on how to prepare for and conduct work procedures on Forensic Accounting and Investigation Standard Number 360, on “Testifying Before a Competent Authority,” issued by the Institute of Chartered Accountants of India (ICAI) and should be read in conjunction with all the Standards relevant to the topic. The contents of this Guidance Note are recommendatory in nature and do not represent the official position of the ICAI. The reader is advised to apply his best Professional judgement in the application of this Guidance Note considering the relevant context and prevailing circumstances.
1.0 Introduction
1.1 The Professional is generally engaged during the legal proceeding or may be called upon by the Competent Authorities to testify on the evidence gathered and reported during the Forensic Accounting and Investigation (FAI) assignment, at which time the Professional is considered to be a “Testifying Professionals (TP)” for the purpose of the FAIS.
1.2 FAIS 360 on “Testifying before a Competent Authority” explains the finer nuances of testifying and expects the TP to adhere to certain norms of testifying in a FAI assignment.
1.3 The requirements of the Standard are expected to be implemented as follows:
(a) To ensure compliance with the first five Basic Principles of FAIS concerning the credibility of the TP.
(b) To extend paramount duty towards the Competent Authority, despite the primary stakeholder being the appointing party.
(c) To focus on testifying only on the facts and evidence gathered and in accordance with prevailing legal and regulatory requirements.
(d) To devote adequate time to preparing and testifying.
1.4 It is important that the TP understands the laws and regulations which are relevant to the assignment, while testifying before the Competent Authority. If appropriate, the TP may consider seeking legal advice prior to testifying before the Competent Authority.
2.0 Objectives
2.1 This Guidance Note (GN) outlines the manner in which the TP prepares and testifies before a Competent Authority as per the requirements of the Standard during the course of, or subsequent to completing, a FAI assignment.
2.2 The objective of this GN is to assist the TP in preparing and testifying before Competent Authorities in compliance with the Standard as follows:
(a) By taking steps required to ensure that the credibility of the TP is not under question.
(b) Engagement with the Competent Authority in a manner which ensures full support and duty towards them.
(c) Understanding and sharing all the required information, facts and evidences when providing the testimony being sought.
(d) Giving full time and attention to the testimony to allow the Competent Authority to perform their duty.
2.3 The GN also provides examples and illustrations to help the TP apply work procedures which may be relevant to the circumstances of the assignment.
3.0 Procedures
3.1 Duty towards Competent Authority: Primary duty of the TP while testifying is towards the authority against which the TP needs to testify, i.e., Court, Tribunal, Economic Offence Wing, Enforcement Directorate, etc., and not towards the Company which may have appointed him. The TP must not engage in advocacy, i.e., should not use their testimony as an opportunity to promote a particular position or outcome that is favorable to any party involved in the case.
3.2 Scope of testimony: The TP is expected to limit the testimony to facts and evidences available or gathered during the course of the engagement. Hence, TP would avoid any speculations or making any assumptions that are outside the scope. For example, if the TP is required to provide testimony about a specific financial transaction, that testimony would be based solely on the evidence and facts available with the TP with respect to such transactions.
3.3 Duty of the Testifying Professional
3.3.1 Obligation: The obligation of the TP is to provide testimony in an impartial and professional manner so as to facilitate the proceedings, irrespective of any contractual obligation with the primary or other stakeholders with respect to the FAI assignment for which the testimony is being sought.
3.3.2 Adequate documentation of the records which may be required to be presented during the testimony such as, engagement letter, report of the engagement, workpapers including the relevant supporting documnets, copies of relevant standards, deposition transcript, correspondence, exhibits, legal orders, directives and any other documents which may be relevant for the case. In future cases or for any other purposes, the evidence may be used to present the foundation and validity of testimony.
3.3.3 Providing impartial testimony: The TP would be involved throughout the case, including performance of necessary work procedures, directing and supervising the team to discover facts and evidence, would be able to provide an impartial testimony. Involvement during the entire engagement would also equip the TP with a deeper understanding of the case under question.
4.0 Explanations with Examples
4.1 The whole process of completing the testimony requires adequate preparation and execution in a methodical way. An example of how this may be planned and executed is explained below and may be used by a TP.
4.2 Understanding the context of the Proceedings: When the Professional is called upon by a Competent Authority to testify, the TP needs to consider following:
4.2.1 Be familiar with the specific procedures followed in the court or authority who has summoned for testimony. The procedures may involve a dress code, rules of evidence, cross examination, and reexamination.
4.2.2 Where necessary legal advice may be taken in the relevant area of law to understand the obligations and potential risks involved with the testimony. Legal counsel can assist in understanding the process and related matters including the roles of the various people involved such as the judge, arbitrator, lawyers, and investigators.
4.3 Preparing for Testimony: Once the context is understood the planning process may involve the following steps:
4.3.1 Create a timeline of events and a general outline what is required in the testimony. Summarise the procedure followed for gathering of evidence and the maintenance of chain of custody and related documentation.
4.3.2 Review any relevant documents, records, statements, or any other item of evidence.
4.3.3 Tabulate data regarding the relevance and reliability of evidence as well as the appropriateness and sufficiency of documentation.
4.3.4 Review the relevant laws and regulations that may apply to the findings and conclusions in the report.
4.3.5 Correlate the findings and conclusions in the report with noncompliance with any regulation or law, where applicable and have the findings cross-referenced with the corresponding evidence and documentation.
4.3.6 Explain the significance of each item of evidence with emphasis on how the finding are supported. If an expert was involved in the investigation, it may be helpful to take assistance in this process and even review the proposed testimony with the expert.
4.3.7 Notes, documents, and other such matters related to the testimony can be carried and referred during testimony.
4.4 Preparing for Cross Examination: The opposing counsel has the right to cross examination wherein, they will attempt to challenge the testimony or highlight contradictions and inconsistencies. As part of the preparation for cross examination, the following are suggested:
4.4.1 List the experience and skills of all the team members involved in the process, including experts employed where applicable so that any aspersions on credibility of the testifying professional can be countered.
4.4.2 Gather data confirming adherence to the FAIS as a whole and the basic principles in particular.
4.4.3 Do a mock run of the testimony to prepare. A legal counsel or a colleague who was part of the case would be helpful in this activity.
4.4.4 There is sometimes an opportunity for Legal Counsel to conduct a re-examination, to clarify any issues raised during the cross-examination and use the opportunity to reinforce any key points, correct any misunderstandings, or provide further context if needed.
4.5 Providing Testimony: This is a formal process and the manner in which it is conducted may vary depending upon the Competent Authority conducting the proceedings. The procedure in a court of law maty vary from an Income Tax Appellate Tribunal or Customs, Excise and Gold (Control) Appellate Tribunal or the Authority for Advanced Ruling in GST. Some good practices to be followed in the course of testimony are provided below:
4.5.1 Listen carefully to each question and take a moment to understand it before responding. In case clarification is required feel free to seek help.
4.5.2 Maintain composure and take time to answer and provide truthful, accurate and consistent testimony. Be aware that there may be attempts to disrupt the trend of thought and discredit the TP in the following ways:
(a) Cast aspersions on personal integrity or highlight past failures.
(b) Raise Conflict of interest issues.
(c) Some questions may be outside the knowledge of the TP. In all such cases passing the question and admitting ignorance is always a better alternative to an incorrect answer. It is acceptable to decline to answer questions under these circumstances.
4.5.3 The TP should confine the testimony to the scope of the engagement and avoid making statements not directly relevant to the subject matter, even if provoked during cross examination.
4.5.4 In case the TP has any areas of conflict of interest that have a bearing on the proceedings, these must be fully disclosed so that the Competent Authority has the information necessary to take a decision on the value of the testimony.
4.6 Examples of Cross Examination: Once the testimony is completed cross examination is an important part of the proceedings where the counsel has an opportunity to counter the testimony of the TP and present facts that are favorable to the opposite party. It would be necessary for the testifying professional to prepare for the cross examination as this is where the value of the testimony will be tested. Examples of the nature and scope of cross examination are provided below:
4.6.1 Present conflicting or contrary evidence to weaken the case.
4.6.2 Bring other professionals or experts who present an alternative view of the case or present alternative hypothesis to explain the facts included in the testimony.
4.6.3 Pick loopholes in the Chain of Custody to establish the possibility that the evidence has been tampered with or present conflicting evidence from other sources.
4.6.4 Question the source of the evidence or the legality of the collection process.
4.6.5 Attempt to weaken the credibility of the TP by looking into past engagements, career records, social media, and other types of open-source intelligence. The purpose of this could be to establish bias or lower the credibility of the TP in the eyes of the Competent Authority.
4.6.6 Test the perception, memory, and skill of the TP to undermine the testimony and cast aspersions on the reliability of the testimony.
4.6.7 Exploit any inconsistency between the testimony of different individuals made during the proceedings. This is more so when the work is carried out in coordination with Agencies. It is necessary to maintain clarity in roles and responsibilities as well as hand over records at key points of transition in the investigation and prepare for testimony accordingly.
4.6.8 Present public domain information that’s conflicts with the statements of the TP in an attempt to create doubt.
