Gary Phelps

With over three decades in the insurance and litigation industry, what key changes have you observed in forensic accounting practices?

Forensic accounting has evolved significantly, particularly in how we use technology. When I started, much of the work was done manually-spreadsheets, calculators, and stacks of paper files. Now, automation, software, and data analytics play a huge role in streamlining loss quantification and can speed up the timing of our work. Our clients are often under time pressures that we strive to accommodate while maintaining the quality of our forensic accounting work. There's also been a shift in the legal landscape, with courts expecting a higher level of clarity and transparency in expert reports. The types of cases we work on have also expanded beyond traditional insurance cases to areas like cyber fraud and large commercial loss claims, especially post-pandemic.

How has your experience as an expert witness in the Ontario Superior Court and the Financial Services Commission of Ontario shaped your approach to presenting evidence?

Testifying teaches you one key lesson: simplicity wins. You can have the most airtight calculations, but if a lawyer, judge, jury, or arbitrator doesn't understand them, they're useless. I focus on explaining things clearly, using simple words and real-life examples so everyone in the courtroom can follow along. It's also reinforced the importance of being prepared-opposing counsel will always look for ways to challenge your findings, so you need to know the evidence and your work inside and out.

Can you share a memorable case that highlighted the critical role of forensic accounting in uncovering fraud or resolving a dispute?

One case that stands out involved a stock loss claim made after an arson fire destroyed a business's premises. A significant stock loss claim was made that could not be supported with physical evidence, as it was destroyed in the fire. We were provided with voluminous digital records suggesting the premises was fully stocked with inventory. However, when reviewing the business's sales and financial statements, the inventory amount claimed did not make sense. Invoices provided supported greater sales than were reported on the business's financial statements. It became clear that the business did not accurately report its sales and had evaded taxation on its profits. Furthermore, upon requesting details of shipping costs and documentation supporting inventory that moved through customs, we found invoices to support the shipment of many containers of inventory overseas with no reported sales. Ultimately, we could evidence that the stock loss claim was fraudulent, and the majority of the business's inventory had been moved from the premises prior to the fire.

What do you find most rewarding about specializing in economic loss claims and fraud investigations?

Every case is a puzzle, and I love putting the pieces together. Numbers can tell a story. Whether it's quantifying a loss for a small business, an injured person, or uncovering financial misrepresentations in a large fraud case, there's a real impact. The work isn't just about numbers-it's about helping insurers, businesses, and individuals work through financial disputes fairly and accurately. Seeing how our work impacts legal outcomes and provides clarity in complex situations is incredibly rewarding.

How do you ensure impartiality and objectivity when providing litigation support or testifying as an expert witness?

Forensic accountants are not advocates-we're independent experts. We have a duty to assist the court. That means sticking to the facts, even if the conclusions aren't what our client wants to hear. I approach every case the same way: follow the data, rely on sound methodologies, and document everything thoroughly. In court, credibility is everything, and once an expert's objectivity is questioned, their testimony loses value. My goal is always to present the financial reality based on the facts and evidence.

What challenges do you encounter when simplifying complex financial concepts for non-specialist audiences in court?

Finance can be intimidating, and legal professionals often don't have a background in accounting. The challenge is breaking down technical analyses-like loss projections or historical earnings trends-into clear, relatable explanations. I use real-world analogies, visual aids, and straightforward language to make sure the key points are understood. The simpler you can make a concept without losing accuracy, the more persuasive your testimony will be.

In your role as a practice leader, how do you mentor and guide the next generation of forensic accountants?

I focus on two things: technical expertise and professional judgment. You can train someone to crunch numbers, but great forensic accountants use analytical thinking and always maintain strong ethical standards. I encourage junior staff to ask questions, challenge assumptions, and develop a sharp eye for inconsistencies. Real-world case exposure is key, so I make sure they get hands-on experience early on-whether it's working through reports, sitting in on client meetings, or assisting in litigation preparation.

What trends or advancements in forensic accounting do you believe will have the greatest impact on the profession in the coming years?

Cases are getting bigger and more complicated, which means forensic accountants must be more careful and thorough. We're also being asked to explain things better-clients and courts want clear, simple answers, not just pages of numbers. The job is changing; we must be fluent in the use of evolving technology, but at the end of the day, it's still about finding the truth and making sure financial claims are fair. The fundamentals of forensic accounting won't change, but the tools we use and the types of cases we handle will continue to evolve.