Forensic Accounting

Moore Kingston Smith’s highly respected forensic accounting team has decades of experience to call upon, in complex cases ranging from listed companies to privately owned businesses and individuals. We provide expert witness, advisory and investigation services and have given evidence in the High Court, Family Court, Crown Court and the Upper Tribunal (Lands Chamber), as well as in arbitral and disciplinary tribunals. We also have extensive experience of acting in alternative dispute resolution forums, such as mediations and expert determinations.

Feedback from our clients is that we write clear and comprehensive reports, which are measured and credible. Where we are providing advisory services, we ensure our advice is pragmatic and focused, so as to enable our clients to achieve the best possible outcome. Our forensic accounting services include:

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Business Interruption

The aim of business interruption insurance is to cover a business for loss of income where the business was unable to carry out its normal operations due to an unexpected event such as the global pandemic.

Where dealing with a simple business with readily identifiable losses, there may be no need for additional assistance. However, complicating factors, such as the impact of Coronavirus, often mean that it is difficult to distinguish between trends and losses arising from different factors. Expert input could be key to accurately quantifying your claim and achieving a fair settlement.

Information gathering to evidence the impact of the business interruption event is critical to support a successful claim. Seeking early advice will assist in the timely gathering of the required evidence and in the preparation of any claim.

Our experienced team has a wealth of experience in acting for both claimants and defendants across a wide range of industries, sectors and sizes. Our team can provide expert witness or expert advisory services, depending on the circumstances of the dispute.

Case studies

Yoga company

The claimant, a yoga company operating several yoga studios in central London, experienced a flood which resulted in the temporary closure of one of its premises, and continuing structural issues which meant the studio remained closed for some time. We were instructed by the claimant to calculate the losses suffered as a result of the flood for presentation to their insurers. Our work involved a detailed review of the claimant’s accounting records, meetings with the client and their legal advisers, and negotiations with the insurer’s forensic accountant to assist with the quantification and successful settlement of the claim.

Care homes

We were instructed by solicitors, acting for a group of companies that operate around 30 care homes in the UK, to quantify the loss of profits incurred by an entity within the group as a consequence of deficiencies in design and construction work undertaken by various firms of architects and design engineers. We were also instructed to consider the group’s funding arrangements and the impact, if any, on the quantum of the claim of the write-off of a large proportion of the group’s overdraft by the bank. This case settled with a positive outcome for our client.

Flood/fire claims against insurers

We have been instructed on numerous insurance claims where we have quantified the losses suffered by businesses as result of flood/fire damage and, in particular, the loss of the profits due to the interruption caused. Claimants we have been recently instructed by include restaurants, clothing retailers, providers of building supplies, car accident repair centres, gym/fitness centres, care homes and art galleries. Most of the organisations instructing us in these cases are owner-managed businesses. A specific example is a supplier of wood flooring to the building industry that suffered a fire at its premises, which destroyed a significant proportion of its stock. We reviewed the claimant’s accounting records and met with the client to determine how best to formulate the losses which resulted in a successful outcome for our client.

Fraud and white-collar crime

The Moore Kingston Smith forensic accounting team has extensive experience of acting in cases where fraud and white-collar crime is alleged to have taken place.

We act for companies investigating such allegations and have also worked with prosecuting authorities, such as the Crown Prosecution Service and Serious Fraud Office. Further details of our investigative capabilities can be found on our fraud investigations page.

Case study: DAS v Asplin
Our experts have been instructed in private prosecutions, including acting as expert witness on behalf of two of the defendants in DAS v Asplin, a case heard in the Crown Court at Southwark. Mr Asplin and two co-defendants were alleged to have benefitted from the purchase by DAS of shares in a private company. In particular, Mr Asplin was accused of artificially inflating the price paid by DAS, by virtue of his position as its CEO at the time the purchase took place. The evidence we provided related to the value of those shares. Mr Asplin and his co-defendant were acquitted of this particular charge.

Case study: Dinglis v Dinglis
We were also instructed in a case which related to the Court of Appeal decision in Dinglis v Dinglis [2019] EWHC 1664 (Ch). One of our experts provided evidence, in the form of reports and oral testimony, in one of the High Court cases which preceded this Court of Appeal decision (see also [2019] EWHC 1664 (Ch)), on behalf of the claimant regarding the extent to which there were shortfalls in income received and accounting discrepancies in the defendant company. The expert witness evidence we provided in this case was adopted in the High Court judgment.

Case study: discrepancies in charity petty cash records
A charity that had discovered apparent discrepancies in its petty cash records appointed us to investigate. We reviewed the accounting records and interviewed staff to understand the accounting systems in place. We prepared a report setting out the likely cause of the discrepancies, which we concluded was a member of staff withdrawing and misappropriating cash. The staff member in question had then manipulated the accounting records in an effort to hide these transactions. The charity reported the matter to the police and provided our report to them, and we were asked by the police to act as expert witness in the criminal action against the staff member. On the first day of the trial the staff member pleaded guilty to the charges against them.

 

Professional Negligence

Providing expert witness and expert advisory services in the context of professional negligence actions against auditors and accountants requires the highest standard of technical expertise. At Moore Kingston Smith this is a given, as our experts are relied on by some of the most established legal teams in the field of professional negligence.

Our team of experts have been involved in a wide range of cases involving allegations of negligence against auditors and accountants concerning a broad spectrum corporate entities. We have extensive experience acting for defendant firms and their insurers as well as claimant parties, such as company shareholders and liquidators.

Senior members of our team sit on the Moore Kingston Smith technical committee, which means we are at the forefront of technical changes in the auditing and accounting professions. They are also integral to the management and implementation of the firm’s audit and accounting quality and control procedures.

Case study: action for negligence against a big four firm of auditors
We were instructed by a shareholders action group of a listed hotel group in an action for negligence against a big four firm of auditors. The hotel company had overstated its performance for the purposes of the listing particulars for a new rights issue, on which the audit firm had given a clean certificate.

The CEO had been indicted for fraud and had been committed to prison for issuing fraudulent statements and forging documents. Following investigation of the audit of the company at all relevant dates, we prepared an expert report criticising the performance of the auditors and the audit partner in charge. The matter settled for a substantial sum very shortly after the report was issued to the defendant firm. Additionally, the audit partner resigned from the partnership.

Case study: investigation on behalf of insurers
We were instructed on behalf of the insurers of a firm of accountants facing allegations of negligence in the preparation of the accounts of a company that sold power tools and other equipment. The claimants contended that, as a consequence of the defendant firm’s negligence, the accounts contained errors, the correction of which caused the company’s financiers to lose confidence in the company’s ability to repay its liabilities. The withdrawal of support by the company’s bankers allegedly caused the company to enter into liquidation. Our work involved reviewing the claimant’s letter before action and preparing an expert advisory report to assist the defendants’ advisers with their response.

Shareholder and partnership disputes

It’s great to be in business with friends and family when things are going well but if a falling-out happens, trying to agree the terms of the business “divorce” can be very testing. At Moore Kingston Smith, we can assist you in valuing the business and any relevant shareholdings. We can also carry out an investigation if foul play is suspected.

If one or more shareholders is seeking an exit from the business, we can provide a valuation of the business and the relevant shareholding. We can also provide calculations on the tax implications of the share sale or any cash extraction. We will be guided by the shareholder or partnership agreement if this dictates a specific methodology or, alternatively, we will apply the appropriate valuation methodologies to arrive at a value.

If the dispute has arisen due to suspected foul play, we can investigate the alleged financial irregularity and produce a report for your legal representatives or your board.

We have been instructed to value shareholdings in a wide range of industries, including technology, manufacturing, professional services/consultancy, retail, healthcare, marketing services, property and real estate, construction, media, education, shipping and marine and betting and gaming.

Our reports can be used as an internal tool for negotiation purposes, or as part of a legal process where our reports will be compliant with the relevant court procedure rules. Our experts can provide assistance at any alternative dispute resolution process, such as mediation or arbitration, or provide evidence in a court setting if required. Our experts pride themselves on reports that are clear and concise, and in assisting you to resolve the issue as efficiently as possible.

Case study: dispute over value of minority shareholding
We were instructed by a claimant in a shareholder dispute over the value of his minority shareholding in an estate agent and lettings business with offices in the North of England. The work undertaken involved a detailed financial review of the companies and their subsidiaries, and an assessment of the value of each, in order to arrive at a valuation for his minority shareholding. As part of the valuation exercise, we were required to have a detailed understanding of the companies and their interactions with each other and the environment in which they operate.

Case study: shareholder dispute arising from alleged unauthorised and irregular transactions
We were instructed on a party-appointed basis in a shareholder dispute, where one party alleged the other had carried out unauthorised and irregular transactions resulting in significant losses suffered by the company. Work involved detailed investigation of the company’s records, examination of invoices raised, examination of the financial statements and analysis of loans and other liabilities, to evaluate the losses allegedly suffered by the company and to assess the value of the company as a consequence of the defendant’s conduct.

 

Matrimonial Proceedings

When a marriage breaks down it can be a very difficult time for the parties involved. This is often compounded by financial disputes, particularly if one or both parties hold shares in a family business or a privately owned company.

At Moore Kingston Smith, we have a wealth of experience providing forensic accounting and expert witness services in the context of matrimonial proceedings, both under party-appointed and single joint expert instructions.

Our expertise in this area centres on valuing businesses and privately owned companies operating across a wide range of industry sectors. These range from small single-location enterprises to large international groups and investment holding companies.

Additionally, our team can provide expert opinion covering:

  • assessment of future sustainable income
  • company cash extraction without affecting core activities
  • tax implications arising from the sale of shares or company cash extraction
  • diversion of income or assets.

Our experts have given evidence in the Family Courts on numerous occasions and are highly experienced in dealing with counsel.

We are also familiar with instructions on a ‘shadow expert’ basis to assist a party in its review of a single joint expert report, or on anomalies or inconsistencies in the information supplied by a party on their Form E.

Case study: valuation of a group of companies
We were instructed on a single joint expert basis in a matrimonial dispute addressing the valuation of the respective interests of the parties in several companies, as well as assessing the liquidity of the businesses for the purposes of enabling the respondent to pay a lump sum within the proceedings, and to assess the sustainable future income.

Our work involved understanding the background to each of the companies involved, examining the salient items within the financial statements, analysing trading and profitability trends, analysing the intercompany transactions for valuation purposes, and carefully examining the personal assets that were held within the companies. Both parties were given the opportunity to provide input at the information-gathering phase. During the course of the work, it was also necessary to review an ongoing HMRC enquiry to assess any impact on the valuation and to consider potential consequences of capital gains tax.

Case study: valuation of shares in PR agency
We were jointly instructed by the husband and wife in matrimonial proceedings involving the valuation of an independent specialist food, drink and lifestyle PR agency. Our work involved a detailed financial review of the company, including separate meetings with the parties to understand the nature of the business, and a detailed review of recent third-party offers to acquire the company, before undertaking a valuation calculation. Our report was used as evidence in court, which involved our expert undergoing cross-examination.

Fraud Investigations

Fraud poses a very real risk to businesses. It is estimated to cost the UK economy £190 billion per year.

When control systems are compromised, the consequences can be costly and receiving rapid assistance can be critical and may prove invaluable. Critical to regaining control is identifying the suspected fraud or other financial irregularities and implementing measures to eliminate control weaknesses or safeguard assets in the future. There may also be the need to quantify losses and take recovery action.

We have extensive experience of investigating and reporting on business fraud and related matters, ranging from the theft of a few thousand pounds, profit diversion and false accounting to complex multimillion pound accounting frauds. We work closely with our Moore Global network partners to provide assistance in other jurisdictions where necessary.

Where a fraud has occurred, we work with companies or legal advisers to identify what has happened, who is responsible, what measures should be put in place to prevent further loss and assist in the recovery of any funds that have been misappropriated. The primary areas in which we assist are as follows:

  • Fraud prevention – reviewing existing internal accounting controls and policies to advise on the implementation of additional fraud prevention measures.
  • Misappropriation – reviewing and analysing large data sets to ascertain whether any funds have been misappropriated and quantify any such misappropriation.
  • Asset tracing and recovery – identifying, investigating and pursuing assets worldwide.

Our experts have been involved in a wide range of fraud and other investigations across diverse businesses, sectors and jurisdictions. We have considerable experience in acting for the prosecution and defence in criminal matters, and claimants and respondents in civil actions.

We do not charge for the initial meeting and all conversations and work carried out are done on a strictly private and confidential basis.

Matters often involve data stored electronically and our eDiscovery team can ensure that this data is effectively integrated into investigations.

Case study: Misappropriation via inflation of invoices
We were instructed to carry out a detailed investigation into the activities of a company director who was accused of misappropriating company funds by inflating invoices with different suppliers over a significant period of time.

The scope of the investigation was to review the company’s accounting records, legal documentation, third-party invoices and bank statements to determine to what extent funds were indirectly diverted to the company director.

Our work involved identifying relationships between the director and suppliers, and calculating the total balance the director was likely to have indirectly received. We prepared a report in the context of legal proceedings, which resulted in substantial damages being awarded in favour of our client.

Case study: Wey Bridging Limited (publicly reported) – Bridging loan Ponzi scheme
We were instructed by claimants in a civil case relating to a suspected Ponzi scheme. The scheme operated via a privately owned company which purported to provide bridging loans in conveyancing transactions.

The instructions were to review the company’s accounting records and the reports made to the investors, to determine the extent of genuine trading and any disparity between the underlying trade and the results reported to the investors.

The matter went to trial where our expert gave evidence under cross-examination by three of the defendants who were litigants in person. One defendant had instructed a barrister. The judge found in favour of the claimants, and the defendants subsequently faced criminal and disciplinary proceedings.

Case study: petty cash fraud at a charity
We were instructed by the trustees of a charity, following the detection of accounting irregularities.

We conducted an investigation into the irregularities and concluded that amounts had been misappropriated by means of cash withdrawals, and that accounting entries to bank and petty cash had been processed, by one or more staff members, in an attempt to hide these withdrawals.

We quantified the amounts involved and set out in our report the evidence identified and our analysis of the accounting records. The charity made a report to the police who have now instructed us, on an expert witness basis, in its criminal investigation.

Expert Determinations

Whether seeking an expert determination as a form of alternative dispute resolution, or entering into the process as a means of bringing a dispute to a binding resolution, selecting the right expert determiner is critical.

At Moore Kingston Smith, we understand the importance of this process to the parties involved. In each case, we make sure we clearly set out the steps to be followed, and that these are in line with the relevant contractual provisions and protocols. What we bring to this is not only our experience of dealing with other expert determinations but also our wider experience and expertise in dispute resolution. This means we can understand all parties’ perspectives and can consider the matter in dispute in the context of the hundreds of forensic accounting cases we have undertaken over the years.

Once we have carefully considered all of the documentation and representations, we make our determination and (if instructed to do so) provide clear reasons and explanations for doing so.
We also assist individual parties, where we are not instructed as the expert determiner, in making their representations, to ensure they receive the fairest possible result.

We have acted in cases where a binding determination has already been made but one or more parties consider there to be a manifest error, in which case the determination can be overturned. We have assisted parties in such circumstances in obtaining a revised determination to their benefit. All of our expert determiners are on the panel for the ICAEW’s President’s Appointment Scheme.

Case study: completion accounts for shopping centres
We were appointed in two related expert determinations, both involving shopping centres which were equally owned by two joint venture (JV) parties. In each case, one JV partner was purchasing the other’s interest and the parties did not agree on the adjustment required, regarding the completion accounts, to the consideration paid. We received extensive representations from both parties and considered in detail each disputed item on the completion accounts. Our work was complicated by limited accounting records, in particular concerning service charge accounts, which had been dealt with by several different agents and spanned many years. Nonetheless, we arrived at our determination which both parties considered fair.

Case study: determination of share price for software company
The two 50% shareholders of a specialist software provider appointed us under the ICAEW’s President’s Appointment Scheme. The shareholders were parting ways and they had agreed one would purchase the other’s shares but they could not agree on the price to be paid. We provided clear instructions to the two shareholders on the process we would follow and received written representations from both. We reviewed these representations and prepared our valuation of the 50% shareholding on the basis of these but also on our own research and experience of valuing privately owned companies. Both parties were able to move on once our determination had been issued.

 

Compulsory Purchase Orders

Moore Kingston Smith has one of a handful of forensic accounting teams who specialise in quantifying compensation payable to businesses affected by compulsory purchase orders.

We provide consultancy and expert witness services to both acquiring authorities and claimants, and our experts have given evidence in the Upper Tribunal (Lands Chamber) on many occasions. We are well aware that businesses can be affected either temporarily or permanently by the compulsory acquisition of their premises, resulting in loss of profits and, in some cases, the loss of an entire business if the loss of the premises causes extinguishment.

For a claimant, if we’re instructed early enough, we can ensure your business is fully prepared for the effects of the scheme, suggesting methodologies to record these effects to ensure your claim is properly evidenced. We use our experience to provide you with a fair calculation of losses and assist you through the process of claiming them.

For an acquiring authority, we can assist with initial valuations to ensure that you prepare realistic budgets at an early stage, as well as providing expert advisory services to assist in negotiations with claimants.

We have worked on large infrastructure schemes, such as the London Olympics, Crossrail and HS2, and many town centre and shopping centre redevelopments.

Case study: KFC franchise compulsorily acquired by TFL
One of our experts was appointed by the claimant, SME (Hammersmith) Ltd, an operator of a KFC franchise at Farringdon that was compulsorily acquired by TfL as part of the Crossrail development. As part of the proceedings, we provided expert witness evidence to the Upper Tribunal (Lands Chamber) which contributed to a landmark decision being awarded in favour of SME.

Our expert contended, based on his experience and a comparable transaction some 18 months before possession, that the loss the owner suffered should be based on a multiplier of 17 times the agreed annual profit. TfL’s expert contended that the multiplier should only be seven times the profit and relied on a comparable transaction which had taken place three months after possession, as well as the fact that in Upper Tribunal proceedings, there had never been an award of more than seven-and-a-half times the annual profit. After a three-day hearing at the Royal Courts of Justice, SME’s evidence was preferred and an award was made of 14 times the agreed annual profit.

Case study: valuation of retail outlets on behalf of acquiring authority
One of our experts was instructed to value some retail outlets in a shopping centre on the instruction of the property developers, in contemplation of a compulsory purchase order being made. While we only had information that was publicly available, we provided a general assessment of the compensation that may be required if the order were to be made. This provided invaluable insight to the developer, which assisted with their budgeting and decision-making process.

 

Forensic Investigations

We have extensive experience of investigating and reporting on forensic investigations for matters ranging in value from a few thousand pounds to multimillion pound cases.

We work closely with our Moore Global network member firms to provide assistance in other jurisdictions where necessary. Our experts have been involved in a wide range of forensic investigations across diverse businesses, sectors and jurisdictions. Some examples of the areas of investigation are as follows:

  • Financial crime – identifying whether any fraud has occurred, quantifying any such fraud and advising on the prevention of financial crime.
  • Internal investigations – reviewing and analysing financial and non-financial data in order to assist in formal or informal investigations.
  • Controls issues – reviewing the controls in place at an organisation to identify deficiencies/risks and providing recommendations for improvement.
  • Stolen cash – quantifying cash taken from entities and the methods used by the alleged perpetrator.

We do not charge for the initial meeting and all conversations and work carried out are on a strictly private and confidential basis.

Matters often involve data stored electronically and our eDiscovery team can ensure that this data is effectively integrated into investigations.

Case study: financial crime
We were instructed by the London branch of an overseas bank to carry out a review of thirteen loans, totalling over $750 million, which had become non-performing.

The primary aim of our work was to identify whether any of the funds transferred by the bank had been diverted for use by other group companies and whether there had been any wrongdoing by the borrowers regarding their treatment of the loans.

We found instances where there had been fraudulent activity on the accounts and identified shell companies with which artificial transactions were likely to have occurred.

In addition to the above, we also set out recommendations to the bank to help identify potential signs of fraud throughout the duration of loan relationships to mitigate risk and limit the loss of funds.

Case study: internal investigation – confidential investigation into CEO’s activities
We undertook a highly confidential and detailed investigation into the activities of a chief executive of a trade association.

The scope of the investigation included financial transactions with the company, expense claims, the extent of overseas travel and the director’s relationships with members of staff. We prepared a detailed report for the chairman of the board, following which disciplinary proceedings were brought against the chief executive. The chief executive was subsequently dismissed and funds were recovered for the benefit of the association.

During our review, we also identified other instances where employees appeared to have been reclaiming excessive business expenses.

Case study: care home and handling of resident’s funds
We were instructed by a charity which, among other things, operates an alms house. We were informed of allegations of misappropriation by one of the employees from residents.

We were asked to investigate the alleged misappropriation, with particular reference to the policies and procedures in place regarding the handling of residents’ monies. We provided a report to the trustees setting out our opinion on the deficiencies in the control systems, the alleged misappropriation and our recommendations for change.

Case study: stolen cash – London Philharmonic Orchestra (publicly reported)
We were instructed to investigate and quantify the fraud perpetrated by the former finance director of the London Philharmonic Orchestra (LPO).

Our work involved a detailed analysis of all cash payments made by the LPO over the relevant period to establish which payments were legitimate expenditure for the benefit of the LPO, and which were fraudulent payments made to, or for the benefit of, the former finance director.

A settlement was reached with the former finance director and with the LPO’s former auditors. The former finance director was subsequently convicted in criminal proceedings and imprisoned.

Disciplinary

Worry and unease are inevitable initial emotions felt by an auditor or accountant that has just been informed that a complaint has been made against them to their professional body. It is therefore imperative at this difficult time to receive trusted support and advice from qualified forensic accountants who are experts in professional disciplinary matters.

At Moore Kingston Smith, we have years of experience acting for auditors and accountants facing disciplinary action, and are renowned for providing independent impartial advice to ensure the fairest possible outcome for our clients in this specialist area. Our work will typically involve reviewing the complaints made against the individual, together with all relevant information, and applying our technical accountancy expertise to advise the individual in their dealings with their professional body.

Our experts are familiar with the professional disciplinary process and have given evidence on numerous occasions to disciplinary committees and tribunals.

We have also acted on behalf of professional bodies in the complaint and investigation processes. Acting for professional bodies as well as individuals provides us with valuable insight into the perspective of both the complainant and the respondent, and allows us to apply this effectively in all types of professional disciplinary instructions.

Case study: accountant facing disciplinary proceedings
We were instructed by solicitors acting for an accountant facing disciplinary proceedings regarding her conduct of an accounts preparation assignment over a three-year period. Our work involved reviewing the allegations made by the regulator and the work carried out by the accountant, and preparing an expert witness report to address those allegations. It also expressed an opinion on whether the accountant had conducted her work in accordance with the relevant professional and ethical standards. The matter is proceeding to a disciplinary hearing at which our expert will give evidence.

Case study: adviser to audit partner facing disciplinary proceedings
We were instructed on an advisory basis by a solicitor acting for an audit partner who was subject to disciplinary proceedings by the ICAEW, for multiple breaches of international standards of auditing concerning one of his audits. The severity of the investigation meant that the audit partner ran the risk of exclusion from the ICAEW, which would have been the end of his career as a registered auditor. Our work involved reviewing the ICAEW investigation report together with all relevant information, including the audit working papers, and preparing a letter of advice setting out points in mitigation to the audit partner’s case. This advice fed into a witness statement put forward by the audit partner before the ICAEW disciplinary committee, and was instrumental in affecting the outcome where the audit partner avoided exclusion and a fine.

 

eDiscovery

In today’s environment, electronically stored information (ESI) such as emails and documents are likely to be important in an investigation. Ensuring that this data is preserved, collected forensically, secured and analysed effectively will help decide outcomes.

Our Forensics team uses advanced technology to make sure that investigations are conducted properly. Leveraging specialised investigation tools, we identify avenues of investigation, review vast amounts of data and minimise costs for clients. Our expert technical capability allows us to produce independent results that are trusted by internal and external stakeholders.

Moore Kingston Smith provides support on simple internal matters and complex civil or criminal litigation. With decades of experience in investigations, we provide expert witness testimony in cases, both written and under cross-examination in court. Our team has in-depth knowledge of all industry sectors and considerable experience of working with relevant law enforcement and regulatory agencies.

Areas where we provide assistance include:

  • Preservation of evidence: we ensure that data which forms part of an investigation is protected from spoliation, either deliberate or accidental.
  • Forensic acquisition of data: maintaining the chain of custody from collection to the end of a matter, our experts extract structured and unstructured data from a vast array of devices and locations, globally.
  • Processing and review: using technology and workflow enhancements, we minimise the cost of ESI review.  Leveraging an international review team, we cover standard to specialised reviews anywhere in the world.

Lead Contact

Moira Hindson

Partner
+44 (0)20 7566 3631
Email: Moira Hindson

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