CASE STUDIES
We provide customized technical support in legal disputes, arbitration, and regulatory hearings or negotiations. The expertise of our team spans across accounting regulations for both public interest (IFRSs) and non-public interest firms (Greek accounting standards), topics in applied business law, financial statements audits, and various types of taxation. Particularly, it is emphasized that addressing various tax issues, whether in or out of court, frequently necessitates a solid understanding of accounting, as the two frameworks (tax and accounting) share important, and sometimes not immediately apparent, connections.
Business Valuation
Court approval to close down a production facility
A heavy industry, significantly affected by a prolonged economic downturn, pursued legal approval to shut down one of its facilities, contending with legal challenges from the labor union. We provided an exhaustive time series analysis of each factory’s performance and the firm as a whole, alongside a strategic and competitive evaluation. Our analysis conclusively showed that the closure of the less efficient facility was unavoidable, essential for safeguarding the company’s long-term financial health in light of prevailing local and international market dynamics.
Business Valuation
Second Opinion for Legal use in a corporate dispute
Two manufacturing companies, acquirer and acquiree, were involved in a mandatory merger as part of a cross-border merger of the parent company. The acquiree’s main shareholder contested the share exchange ratio of the merger in court and requested our second opinion on four valuation reports concerning both entities. We conducted an in-depth evaluation of the assumptions in each valuation report, identified inconsistencies and errors, and provided appropriate recommendations.
Business Valuation
Legal use in an arbitration tribunal
Following the 2008 financial crisis’s outbreak, both the lessor and lessee of a large property faced severe economic challenges. The lessor struggled with high debt repayments, while the lessee faced difficulties fulfilling lease obligations due to the economic downturn. The case was presented to a three-party arbitration tribunal. At the Judges’ request, we conducted an independent evaluation of the financial statements and solvency of both parties to ascertain their ability to meet the lease terms and maintain solvency under various scenarios.
Business Valuation
Legal use in a corporate dispute
Following a long-standing disagreement between the majority and minority shareholder of a sizable, limited liability company, the competent court ordered that the minority shareholder exit the company and receive, in cash, the fair value of the participation held. Under the same decision, the task of the valuation of the company was given to a judicial accounting expert. In the context of this case, we acted as technical advisors to the judicial accounting expert and provided a thorough valuation of the company, employing widely accepted valuation models and techniques, under alternative economic scenarios. In addition, we prepared, following a thorough examination of the valuation report prepared by the judicial accounting expert, a second opinion to rebut the arguments put forward.
TECHNICAL SUPPORT IN LEGAL CASES
Legal use in a corporate dispute, testimony in court
An industrial company was defrauded by a materials supplier, in collusion with a trusted employee. The fraud entailed fictitious purchases of raw materials totaling approximately €1 million over four years. We were appointed as technical advisors to assist with a judicial report being prepared by a court-appointed accounting expert. Our services included scrutinizing production methods, conducting a detailed analysis of costs, operations, truck capacity, and relevant documents to expose the fraud (i.e., the invoiced quantities could never have been delivered). Additionally, we addressed inquiries and countered arguments presented by the judicial expert throughout his report’s preparation, which lasted over a year, and provided a detailed second opinion on the final judicial report to rebut the arguments made. Finally, we delivered oral testimony before the competent Five-judge Felony Appeals Court of Athens.
TECHNICAL SUPPORT IN LEGAL CASES
Legal use to reclaim damages
A systemic bank incurred significant losses from loans granted without adhering to the bank’s lending criteria, a result of employee fraud. The incurred losses were insured against fraud with a major insurance company. Upon the bank’s request, using a dataset provided to us and employing a computer programmer, we validated the bank’s claim as fully justifiable. We estimated the average accrued interest rate per loan and loan period, confirming that these rates were comparable with the prevailing interest rates during the lending period.
TECHNICAL SUPPORT IN LEGAL CASES
Second opinion on an internal audit report: Legal use in a court dispute, testimony in court
Following a company co-ownership dispute, the court mandated the cancellation of a minority shareholder’s shares and compensation based on the company’s fair value. Subsequent legal battles involved accusations of fraud, embezzlement, and defamation. Our client requested a second opinion on an internal audit report that had led to charges against them. We meticulously evaluated the audit report, applying accounting standards, internal control guidelines, legal requirements for record-keeping under Greek legislation, and best practices to successfully counter the allegations made.
TECHNICAL SUPPORT IN LEGAL CASES
Second opinion in a criminal case, in the aftermath of a corporate dispute
In a legal dispute among the beneficiaries of the owner of a family business who had passed away, we were asked to provide a second opinion on an internal audit report that had been prepared by an accounting expert at the request of the group of minority shareholders. The report claimed a series of acts of mismanagement, embezzlement, violation of corporate and tax legislation, on the part of the management of the business representing the majority shareholdings. We were able to refute all claims and demonstrate that the report was based on misunderstanding of a number of provisions of corporate and tax legislation, accounting and financial reporting practices, as well as the realities of the business.
Interpretation of accounting standards
Interpretation of social contribution legislation: Legal use
A broadcasting corporation is subject to an additional employer’s contribution on revenue directly related to media and entertainment activities, as per the law. Our client sought a thorough evaluation and interpretation of existing legislation to accurately determine the basis for estimating an employer’s contribution for presentation to the competent court. We conducted an analysis of the various types of operating revenue of broadcasting corporations and relevant legislation to ascertain the correct basis for estimating the amount of employers’ contributions.
Interpretation of accounting standards
Accounting and tax treatment, management use
Our client, a financial institution had sold a number of pieces of industrial land under the term that the sale shall be revoked, if the buyer was unable to use it for the agreed purpose within a specified period of time. We embarked on a thorough examination of the terms of the sale contracts and related accounting standards and legislation, with a view to recommending the appropriate treatment of the transaction (reversal of sale), from both the accounting and tax perspective. Based on our analysis of relevant provisions and the terms of the initial contract(s), we recommended a solution fully compatible with applicable accounting framework (IFRSs) which also ensured the recognition of tax losses carried forward.
Interpretation of accounting standards
Accounting and tax treatment, management use
Our client had planned to refinance its long-term funding from European financial institutions. The early repayment of the initial loans entailed the prepayment indemnity of a significant amount. We embarked on a thorough examination of the terms of the refinancing agreement and the related provisions of applicable accounting standards (IFRSs), to recommend the appropriate accounting treatment. We also examined the tax implications of the transaction and recommended appropriate treatment.
Interpretation of accounting standards
Recognition of brand – Correction of error
Our client, a prominent sports club, operates under the legal form of a limited liability company. By law, it has the right to use, for a given period, the emblem (brand) of the society sports club. In return for the use of its asset (the emblem), the society sports club holds shares in the sports club company and enjoys other privileges. Yet, the value of the brand had not been recognized by the sports club company since its inception. Following an examination of applicable (often confusing, contradicting and incomplete) legislation and related accounting standards, we concluded that under the true and fair override criterion in preparing corporate financial statement, the sports club company should recognize the value to the brand in its financial statements as a retrospective correction of error. Τhe value of the brand as determined using an appropriate, in the circumstances, method.
Tax disputes
Legal use in a tax dispute
Our client, a large heavy industry company, sells its key product (which is traded on global commodities exchanges) to a multinational firm, at prices agreed under a long-term, standardized contract in common practice, world-wide. Within the space of a few years from the signing of the contract, the spot prices for the product significantly exceeded the agreed price. The Tax Authority auditors contended that our client was under dominant influence by its customer. Thus, they argued that the true selling price for income tax purposes should be the spot price. After a thorough review of all relevant case parameters, including applicable Accounting Standards, Greek corporate legislation, relevant EU Directives, and best international practices, we prepared a detailed report. This report demonstrated that our client was not under the dominant influence of its customer and that the contracted price, rather than the spot price, should determine taxable income. We further extended our analysis to show that the contract price, increased by the economic benefit of a significant upfront deposit by the customer, was comparable to the five-year forward prices at the time of contract signing and to prices agreed between independent firms under similar conditions. Thus, the contract price was fair and justifiable under the circumstances.
Tax disputes
Legal use in a tax dispute
In order to respond to questions raised during a tax audit, a major multinational insurance company requested our opinion regarding the appropriate accounting treatment of certain types of investments. Following an in depth evaluation of the terms of these investments, we concluded that the investments in questions are treated off balance sheet, given that under the relevant terms and conditions, the clients of the insurance company bear substantially all the risk of their investments. In other words, gains and losses arising from the valuation of the investments in question at year end, should not be recognized by the insurance company and that it should only recognize as income the commission(s) earned.
Miscellaneous
Examination of accounting records – Legal use in a corporate dispute
Our client, a group of companies, initiated legal proceedings against the new owners of two subsidiaries that had become independent, regarding outstanding balances of receivables and payables as of a specific date. Our services involved preparing a report, based on a meticulous examination of maintained accounting records, to document the amounts due or claimed between the two parties for judicial purposes.
Miscellaneous
Policy document on prepayment of taxes
In assisting with public policy development, our client requested a policy paper on the impact of pre-paying taxes (e.g., income tax, VAT, property tax) for future fiscal years. Our detailed analysis concluded that advance tax payments, made voluntarily by entities with excess liquidity, align with current Greek legislation, which is based on the European System of Accounts (ESAs) and the International Public Sector Accounting Standards (IPSAS).
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