A Case for Forensic Accounting
As hotel operators and asset managers, Dakota Ridge has dealt with numerous property losses and business-interruption claims, but never a loss as large, as complicated and as enduring as the one that involved our New Orleans hotel, the Renaissance Pere Marquette, after Hurricane Katrina.
Combined property and contents damages, as well as business interruption losses, exceeded $35 million. And while many parties were responsible for negotiating the settlement, the guidance provided by forensic accountant Bob Glasser, a forensic accountant and managing director at BDO Consulting, a division of BDO Seidman, was paramount.
Dealing with a catastrophic loss is complicated and time-consuming. Forensic accountants help to bridge the knowledge gap and smooth the claims process for the owner in several ways: Foremost, forensic accountants understand the dynamics of your policy and its coverage better than you, something which is critical in preparing and negotiating the claim; forensic accountants also assist owners and operators by assuring loss-related items — whether consumables, operating supplies or equipment — are properly accounted for under the policy, thus assuring maximum reimbursement; and forensic accountants are your advocates in dealing with adjusters: They will, if necessary, challenge calculations and loss estimates prepared by the adjuster's forensic accountant (In cases involving a complicated loss, adjusters always employ their own forensic accountants.)
While many hotel owners never experience a catastrophic loss, a little preparation can go a long way in the event your property should become a casualty:
Review your policy for coverage attributable to windstorms (i.e., hurricanes and tornados), flooding, earthquakes and business interruption, along with the associated values and deductibles for each.
Make certain your policy provides for reimbursement of claim preparation and accounting fees so you can engage an experienced forensic accountant.
Finally, if faced with a loss, consult with a forensic accountant in advance of any conversations or negotiations with the adjuster. He or she can prepare you with background history on similar losses, assist with setting reasonable expectations for reimbursement on your loss and set the stage for successful negotiations with the adjuster. Circle 104
Chip Wilson, managing partner of Denver-based Dakota Ridge Real Estate Advisors, has more than 22 years experience in operations, asset management and real estate investment advisory services, representing institutional and private clients.
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