Neutral accounting arbitration is a form of alternative dispute resolution. In a neutral accounting arbitration the disputing parties agree to engage an independent financial expert to serve as a trier of fact. As the fact finder, the neutral accountant makes binding determinations about the accounting treatment for submitted issues in controversy. The determinations made by the neutral accounting arbitrator are usually communicated to the disputing parties in a written decision. The written decision letter may be provided to the disputing parties with or without reasoning based on the engagement terms.
Although there are a wide variety of disputes giving rise to the need for neutral accounting arbitration, the discussion herein is limited to accounting disputes that arise in connection with mergers and acquisitions. These are commonly referred to as post-acquisition disputes. Post-acquisition disputes may arise from the following types of accounting disagreements, among others: