PBTK Case Study #3: Determine Economic Losses as Neutral Expert

PBTK was retained as a neutral fact finder to make a final determination of tenant economic losses pursuant to an Engagement Protocol drafted by counsel pursuant to a settlement arrangement. This business interruption claim for lost profits resulted from water intrusion and the subsequent repair process at a men’s clothier tenant (“Clothier”)
located in Las Vegas.

Relevant issues included:  Loss period, Gross profit margins, Methodology for estimating lost sales and Impact of related-party supplier relationship.


PBTK performed procedures to determine the time-span of the business interruption, quantify losses and determine the extra costs incurred as a result.


Review loss estimates prepared by the litigating parties; perform site visit; review photographs of the water damage; conduct interviews with the general manager and corporate-level accounting personnel; Evaluate monthly retail traffic counts and monthly
relative sales indexes for other tenants of the shopping venue.

Forensic Investigation and Analysis:

Background research on the Clothier, including its origin and mode of operation; analyze and evaluate financial statements and tax returns of Clothier; develop predictive indicators for quantifying lost sales using composite sales indices from other retailers; determine loss period for the Clothier; consider possible avoided costs; quantify any extra costs incurred as a result.

Quantify the Loss:

An economic loss was determined, including business interruption loss and extra cost components.


Issued a Preliminary Report from which the parties were able to reach a settlement.


We Speak Accountant

Is the language of accounting confusing you?  Don’t worry – we’re fluent!  By speaking the language of accounting we are able to provide thorough analysis and concise reporting in financial data laden cases.

The forensic accounts at Piercy Bowler Taylor & Kern have years of professional training and are able to sift through the financial details, interpret the data and organize the information into usable and understandable reports.  Mike Rosten leads the dedicated Litigation Support Services team with his experience in addressing discovery challenges, fraud investigation techniques, damage calculations and discovering what really happened.

If you need help with litigation strategy and understanding the accounting environment in a variety of areas, our experts can help.  We have experience in state and federal governments and agencies, gaming businesses, insurance companies, and many others.

Our team of can help you in these main categories of service:

  • Fact Finding
  • Settlement Issues
  • Witness Services
  • Damage and Valuation Analysis
  • Fraud Investigations
  • Bankruptcy Financial Advisors

Discover. Interpret. Organize.

Contact Mike Rosten by calling 702-384-1120 or by clicking here to receive additional information.

PBTK Case Study #2: Court Appointed as Special Master

PBTK was appointed by the Eighth Judicial District Court, Clark County, Nevada to serve as the fact finder in all accounting issues related to a tenant – landlord dispute. This was a multi-year dispute pertaining to misallocation of common operating costs
(“Additional Rent,” also known as CAM).


PBTK’s assignment as Special Master involved performing a Forensic Investigation using the accounting records for costs included as Additional Rent, tracing those costs to supporting documents and allocating the Additional Rent to the tenant pursuant to lease agreements.


Review written summaries highlighting the dispute issues; analyze the general ledgers to determine those costs included in Additional Rent; review lease agreements of the tenant; conduct meetings with counsel.

Forensic Accounting Procedures:

Determine those specific costs included in Additional Rent; trace costs to supporting documentation (invoices, journal entries, or payroll); summarize the Unsupported and At Issue costs; evaluate cost offsets and lease-specified credits; analyze tenant allocation methods and square footage/HVAC-usage factors.

Develop findings:

Recast the Additional Rent reconciliation statements using recalculated proportional allocation factors, after adjusting cost pools for Unsupported and At Issue Costs.


A report of our findings was issued to the Court and the parties reached a settlement prior to trial.

Forensic Accounting Investigations 101

You need a forensic accounting investigation, but you may be wondering what that may involve.  No two investigations are the same, each investigation presents its own challenges that will need to be addressed.  According to www.forensicaccounting.com, these are some basic steps to a forensic accounting investigation that can help you to be better prepared to help the forensic accountant you hire.

 Meet with the client

  • The forensic accountant will generally want to meet with the client to get an understanding of what is needed, the basic facts of the case, who is involved, and what potential issues may come up.

Perform a conflict of interest check

  • The forensic accountant will want to perform a conflict of interest check once all parties are known, to adhere to required standards.

Perform an initial investigation

  • By performing an initial investigation, the forensic accountant can get a basic idea of what is involved to help them in putting together their plan.

Develop a plan

  • This plan is going to direct how and what the forensic accountant does during the investigation.  As with all plans, it may require adjustments, depending on what is found during the investigation.

Obtain relevant evidence

  • This is where you can be most helpful.  Getting the forensic accountant timely access to the relevant evidence, such as documents and accounting systems, is important.  Once the plan has been developed, documents and other evidence should be assembled to support the investigation.

Perform analysis

  • This may be the most time consuming step.  The forensic accountant will perform analyses, based on their plan and the evidence that they have gotten.  These analyses may include:
    • Damage calculations
    • Asset tracing
    • Transaction summaries
    • Transaction tracing
    • Financial statement comparisons

Prepare the report

  • The financial accountant will write a report that summarizes what they were asked to do, the scope of the investigation, what they did, procedures and methods used, limitations, and what they found.  Schedules, graphs, tables and other relevant information may be included in the report to give the user a complete package.

 Although every investigation is different, these basic steps give you an idea of what the forensic accountant will do for you.