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BP Business Economic Loss Claim Appeal 2016-606: CPA’s short billing cycle supports AVM, not Professional Services Methodology


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.

BP appeals a BEL award to an accounting firm on a single preserved basis. It argues that in this appeal, as in all 73 appeals involving accountants decided after the approval of Policy 495, the Program accountants exceeded their authority under said Policy by applying the AVM methodology to Claimant’s financials instead of the Professional Services methodology. BP elaborates that like most accounting firms, Claimant’s primary billing activity occurs during tax season, from January through April of each year, yet its cash basis financials reflect that revenue is received a month later, from February through May of each year. BP notes that this is significant because the benchmark period in this case commences in May, which radically affects the size of Claimant’s award. It posits that the Professional Services methodology was designed for this very situation where a claimant receives revenue in later months from when it is earned, and notes that AVM is inappropriate, because it is designed to reallocate expenses, not revenue. BP concludes by asserting that the Program accountants failed to give a sufficient factual basis from which to deviate from the Professional Services methodology, and seeks a remand to recompute the award using Professional Services or alternatively an award of $249,411.00, which is BP’s pre-RTP award computation applying Professional Services methodology.

In its pro se memorandum, Claimant first cites to prior similar arguments made by BP in the areas of doctors’ and realtors’ claims, which were consistently defeated on appeal. More significantly, Claimant points to other appeals decided by this panel involving BEL awards to accountants where essentially the same argument was unsuccessfully made by BP.

In the end, this panelist is influenced not only by these precedents, but especially by the fact that the record shows that the Program vendors closely reviewed the Claimant’s financials, and as allowed by Policy 495, made a judgment call as to which methodology best sufficiently matched Claimant’s revenue and expense pattern. As required by Policy 495 (see Sec. II.A and Footnote 9), the Program accountants specifically found a particular basis–a very short billing and earnings cycle– as the reason to resort to use of AVM herein. On this record, this panelist can do nothing but endorse their professional latitude granted in Policy 495 in choosing that methodology. As such, Claimant’s final proposal, affirming the award, must be chosen in this baseball appeal.

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