business interruption the cpa’s perspective november 12, 2009

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Business Interruption The CPA’s Perspective November 12, 2009

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Page 1: Business Interruption The CPA’s Perspective November 12, 2009

Business Interruption

The CPA’s Perspective

November 12, 2009

Page 2: Business Interruption The CPA’s Perspective November 12, 2009

BackgroundCharles S. Amodio, CPA, CFF, MBA

Partner

Bollam, Sheedy & Torani, CPA’s (BST)26 Computer Drive West

Albany, NY 12205

(800) 724-6700

[email protected]

Specializing in Economic Damage ClaimsBusiness Interruption

Lost Profits

No-Fault Automobile Claims

Page 3: Business Interruption The CPA’s Perspective November 12, 2009

What do you know about Business Interruption?

Business Interruption Insurance What impact will a business interruption have on your

business? Do you have a plan in place to deal with a business

interruption? Will you be able to successfully document a business

interruption loss? Business Income Loss Calculations

Page 4: Business Interruption The CPA’s Perspective November 12, 2009

Business Interruption Insurance Coverage

Do you have business income coverage?

What are you covered for?

Limitations to coverage

Do you have sufficient coverage?

Is the coverage right for your business?  

Page 5: Business Interruption The CPA’s Perspective November 12, 2009

Impact of a Business Interruption Loss of sales Loss of customers/clients long-term Loss of production Employees and staff Loss of inventory Loss of records Facility and equipment loss Bankruptcy Stress

 

Page 6: Business Interruption The CPA’s Perspective November 12, 2009

Business Interruption Plan

What is your first reaction? Temporary facilities Mitigating the loss Outsourcing Lease agreement Recordkeeping Backup financial information Up to date with tax filings Review insurance coverage annually

 

Page 7: Business Interruption The CPA’s Perspective November 12, 2009

Documenting a loss

Annual income tax records and/or financial statements Monthly Profit & Loss statements Sales records Payroll records Extra expense Inventory records Asset listings Segregating business income loss by divisions Accounting Software

Page 8: Business Interruption The CPA’s Perspective November 12, 2009

Understanding how losses are calculated

Losses are not based solely on lost sales or net income Economic Loss Net Income plus continued expenses Gross Profit less discontinued expenses Seasonality Make-Up sales/Deferred Sales Unrecorded sales Rental properties Equipment losses based on replacement cost