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BP Business Economic Loss Claim Appeal 2016-1717:SP Accountants’ Policy 495 Adjustments to Claimants Cash Basis Accounting Negates BP’s Appeal

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The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms

Claimant operates a poultry farm in Carthage, Mississippi. The Settlement program awarded Claimant $85,425.30 pre-RTP. BP appeals, asserting the Settlement Program erred in its reallocation of Claimant’s monthly revenue.
The Program Accountants addressed the revenue timing issues resulting from Claimant’s cash basis accounting, and made certain compensating adjustments to Claimant’s revenues. Claimant’s P&Ls triggered Policy 495’s second, fifth, sixth, and seventh tests for unmatched claims. The Settlement Program obtained records showing the start and end of Claimant’s growth cycles; exercised their professional judgement in making adjustments as contemplated by the Policy, and then applied Policy 495’s AVM methodology to calculate the award.
BP maintains that the pre-Policy 495 adjustments weren’t adequate. In essence, BP is arguing for a complete restatement of Claimant ’s P&Ls, converting them from a cash basis to an accrual basis. This is not required by the Settlement Agreement or by Policy 495. The adjustments made by the Settlement Program,coupled with the calculation pursuant to Policy 495’s AVM methodology, achieved sufficient matching. The use of cash basis P&Ls is specifically addressed, with approval, by Policy 464, approving use of cash basis financials used by the claimant in the normal course of business, and prepared contemporaneously in the conduct of the business.
BP’s appeal is denied. The Award is affirmed, and Claimant’s Final Proposal,consistent therewith, is hereby selected.

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