Brazil’s Best Counsel 2021 - Chapter Opening: Litigation Support & Expert Witnesses: Accounting

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Accounting Expertise in the Arbitration Sphere

Accounting expertise is an comprehensive investigative examination of a matter which depends on the knowledge of accounting science performed by an accountant and aims to clarify, to technicians and lay people, a technical finding on certain facts.

From this description, it appears that accounting seeks to elucidate and contextualize recorded – or omitted – economic events in bookkeeping within the casuistry. When using accounting expertise in conflict resolution procedures by sentence, as is the case with arbitration, accounting expertise is used as an instrument of proof.

Arbitration, in turn, brought an enormous evolution to the use of evidence resources for the parties which opt for this dispute resolution system, as the technical work which is presented is thoroughly scrutinized by both parties and the arbitrators, either written questions and answers, whether in the very special form of an audience in which, with very rare exceptions, the truth arises.

This introduction is necessary when it comes to accounting expertise in arbitration in Brazil because it has been only 24 years since the law was first published, with respect to the consolidation of the system and recognition from the Judiciary. Therefore, it is inevitable to report the rediscovery of accounting expertise as superlative evidence for conflict resolution.

Growing in use, increasing its visibility and defining the quality requirements, this practice started to be developed by professionals with excellent knowledge and by specialized professionals in high volume and highly complex cases, developing teams of expert accountants capable of, together, providing the information required within arbitration proceedings.

This is because, the input of arbitration in the Brazilian legal system took place in conjunction with other rules of fiscal regularity and market opening that brought international investment interests to Brazil. Thus, an evolutionary process of (i) mergers and acquisitions for privatization and for the private market started, also, (ii) infrastructure development for highways, power plants, ports and all other investment areas, (iii) complexity of corporate relations, and, finally, with (iv) the entry of public administration in the solution of conflict by arbitration.

These relations generate economic events and economic events generate records that must be organized in the form of adequate accounting, which, in turn, received the advance of corporate law in order to shape the Brazilian accounting structures - which were already advanced - to the new concept. That proposes, a dynamic and no longer static view of the financial statements.

This evolution urges for accounting professionals to be trained as truly expert accountants and, even more, requires that they organize themselves into companies capable of delivering high knowledge to the market from the methods of data collection to the interpretation of complex economic events.

Academic experts are not removed from the market; on the contrary, the market also reserves for them the scientific opinion on certain events, based on the available database. However, exclusion from the market of (i) opinionated accountants, (ii) professionals who do not train or keep their teams trained, as if they were leftovers from the market, and (iii) accountants who in each case look to hire autonomous in the market for each case, can be envisaged. This reality is already in force.

Therefore, there has been an advance in the area of accounting expertise through the legitimate pressure of the parties that demand indisputable competence to provide knowledge and information on the facts that should be legally assessed by the arbitral tribunals.

The next advance - and this I believe will be constant - consists in improving the application of the practice, with the definition of an appropriate form for the presentation of the works of experts hired by the parties, as well as of experts who may be appointed by the arbitral tribunals. However, this is another story, which is for another chapter.




Silvio Simonaggio is an economist, accountant, and lawyer. Mr. Simonaggio is the founder of Simonaggio Perícia (Simonaggio Certeza Técnica) in 1976 and Simonaggio Advogados in 1994. He works professionally with all areas and specializes in the areas of accounting, economic and tax expertise and law. In academic life, he lectures on evidence and case studies at the Regional Accounting Council of São Paulo (CRC) and Universidade de São Paulo. Mr. Simonaggio occupies chair number 32 of the Paulista Accounting Academy since 2011. He acts frequently in arbitrations as an expert on behalf of the parties and as an expert of the court.


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