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Business Interruption The CPA’s Perspective

Business Interruption The CPA’s Perspective. November 12, 2009. Background. Charles S. Amodio, CPA, CFF, MBA Partner Bollam, Sheedy & Torani, CPA ’ s (BST) 26 Computer Drive West Albany, NY 12205 (800) 724-6700 camodio@bstco.com Specializing in Economic Damage Claims

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Business Interruption The CPA’s Perspective

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  1. Business InterruptionThe CPA’s Perspective November 12, 2009

  2. Background Charles S. Amodio, CPA, CFF, MBA Partner Bollam, Sheedy & Torani, CPA’s (BST) 26 Computer Drive West Albany, NY 12205 (800) 724-6700 camodio@bstco.com Specializing in Economic Damage Claims Business Interruption Lost Profits No-Fault Automobile Claims

  3. 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

  4. 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?

  5. 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

  6. 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

  7. 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

  8. 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

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