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BP Business Economic Loss Claim Appeal 2017-1250:Policy 495 Allows Accounting Vendors Discretion to Achieve Sufficient Matching

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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

The Claims Administrator awarded $39,070.87, pre-RTP to this residential contractor in Loxley, Alabama (Zone A). Because of the zone location, causation was presumed. When Policy 495 criteria were triggered, the claim proceeded under the Construction Methodology. BP appeals, asserting as its sole preserved assignment of error that the Settlement Program was inconsistent in its application of the Construction Methodology. BP’s specific complaint is that the program accountant did not apply the Construction Methodology consistently across all time periods. Under this methodology, revenues were reallocated to the months in which work on projects was ongoing. BP argues that such allocations should have included revenue for 2007 as well as for July and September of 2008. BP therefore argues that the inconsistent application of the methodology resulted in an inflated award. BP seeks remand for further reallocation or alternatively presents a Final Proposal of $0.
De novo review does not support BP’s contention. The program accountant thoroughly examined Claimant’s revenue and expenses and made appropriate reallocations as documented in the Calculation Notes: DWH Accountant noted that the Claimant recorded revenue and expenses sporadically throughout 2007-2011. It was noted that these increases were the result of completion of certain projects. The expenses and revenues related to the projects were not reported until its completion, The Claimant’s Accountant provided Cost Schedules with expense & associated revenue amounts for the projects.
DWH Accountant removed the total COGS amount attributable to the work performed on each project (Adjustment 3) and reallocated the variable costs using balances provided in the Cost Schedules (Adjustment 4). DWH Accountant excluded expenses that would be categorized as 0 COGS – Fixed 0 pursuant to 4C when reallocating costs associated with these projects. Revenue attributable to each project was removed (Adjustment 1) and reallocated as proportion based on monthly COGS over the total variable job costs per job (Adjustment 2). Expenses that were incurred prior to 2007, and the related revenue that was allocated, were removed from the compensation calculation.
DWH Accountant noted an insignificant negative variable expense balance reported in Cost of Home Sold and Licenses & Permits Exp in the years 2009-2011. As such, DWH Accountant made an adjustment to reverse these balances. As these balances were insignificant, no additional outreach was performed.
Policy 495 affords the accounting vendors with the discretion to exercise their profession judgment to achieve sufficient matching. No abuse of that discretion has been demonstrated here. Accordingly, Claimant’s Final Proposal is the correct choice. Appeal Denied.

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