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Reimbursement of Accounting Fees in the Deepwater Horizon Settlement Claims
August 2, 2012
Reimbursement of Accounting Fees in the Deepwater Horizon Settlement Claims

The LCPA has received many inquiries concerning the reimbursement of accounting fees in the Deepwater Horizon Settlement Claims, including contingent fee contracts, the reimbursement of accounting services as provided in §4.4.13.6 of the Settlement Agreement between Class Counsel and BP, and the form that must be submitted in order for claimants to be reimbursed for accounting services.

The Claims Administrator will not prohibit contingent fee contracts. However, in order to get reimbursed, accountants must submit time and charges statements detailing date, person, function, billing rate, hours and amount. Note that only time incurred after March 8, 2012, will be reimbursable pursuant to §4.4.13.9. Under §4.4.13.10, the Claims Administrator may ask for submission of the engagement letter or contract as "other supporting documentation" of the accounting services. If no details are submitted by the accountant, there will be no reimbursement. No out-of-pocket expenses of the accountants will be reimbursed.

As a reminder, under the Louisiana Accountancy Act and the State Board Rules, if a CPA performs services under a contingent fee arrangement, independence becomes impaired. Therefore, with respect to client engagements and relationships in which independence must be maintained, a contingency should not be charged.

FAQs

The Deepwater Horizon Claims Center (DHCC) has issued the following frequently asked questions (FAQs) for claimant accounting support reimbursement.

Q: If I had to retain an accountant or other professional to assist me in filing my Claim Form and I receive a Settlement Payment, can I be reimbursed for the payments I made?

A: If you receive a Settlement Payment for an Economic Damage Compensation Amount or from the Seafood Compensation Program, you are eligible for reimbursement (up to a certain amount) of reasonable and necessary accounting services if the services were provided by a certified public accountant, an enrolled agent or an individual with an IRS Preparer Tax Identification Number, provided the professional has the required licensing and is in good standing.

Legal fees cannot be reimbursed. The professionals must verify that to the best of their knowledge they have submitted the information provided to them by the claimant on a consistent basis and have not ignored the implications of information known or reasonably suspected to be untrue, incomplete, inconsistent or inaccurate. For an explanation of how reimbursements for qualifying accounting services are calculated please refer to Sections 4.4.13.6 to 4.4.13.11.

Q: Who is eligible for reimbursement of accounting support fees?

A: Claimants who receive Settlement Payments for Economic Damage Compensation Amounts or from the Seafood Compensation Program, as explained more fully in FAQ 101.

Q: Can I receive reimbursement for the out-of-pocket expenses incurred by my accountant or professional while preparing or filing my claim?

A: No. Section 4.4.13.3 allows reimbursement only for the services of a certified public accountant, an enrolled agent or an individual with an IRS Preparer Tax Identification Number. Sections 4.4.13.7 and 4.4.13.8 specify that we will reimburse you "based on actual fees incurred." The Settlement Program will not reimburse you for an accountant's out-of-pocket expenses, such as phone bills, travel, copying, etc., for they are not fees. You can find the text of Sections 4.4.13.7 and 4.4.13.8.

Q: What documents do I have to submit to receive reimbursement for my accounting fees?

A: You must submit the following:

  1. Invoices itemized by date and person that specify the work being performed on your behalf;
  2. A Sworn Written Statement for Claimant Accounting Support (SWS-38) signed by your accountant or professional; and
  3. A copy of any written contract between you and your accountant or professional for services done for you on your claim. If there is no written contract, your accountant or professional must explain the oral agreement between you and your accountant in Section D of the Sworn Written Statement for Claimant Accounting Support.
Q: Can I receive reimbursement for accounting fees if my accountant charges a contingency fee or a flat fee?

A: The Settlement Agreement only allows reimbursement for accounting services on an hourly basis.

  1. Under Sections 4.4.13.6 and 4.4.13.7 of the Settlement Agreement, Individual Claimants may receive up to two percent of the total Economic Damage Compensation Amount (excluding the Risk Transfer Premium amount) over $10,000 as reimbursement for accounting services, up to a maximum of $6,000. All payable claims $10,000 or under are limited to $200 reimbursement. To determine the reimbursable amounts subject to these limits, the Settlement Program will reimburse for reasonable and necessary preparation rates up to $85 per hour and supervision and review rates up to $130 per hour. Review and supervision hours may not exceed 25% of total time spent.
  2. Under Sections 4.4.13.6 and 4.4.13.8 of the Settlement Agreement, Business Claimants may receive up to two percent of the total Economic Damage Compensation Amount (excluding the Risk Transfer Premium amount) over $50,000 as reimbursement for accounting services, up to a maximum of $50,000. All payable claims $50,000 or under are limited to $1,000 reimbursement. To determine the reimbursable amounts subject to these limits, the Settlement Program will reimburse for reasonable and necessary preparation rates up to $110 per hour and supervision and review rates up to $160 per hour. Review and supervision hours may not exceed 25% of total time spent.
  3. For more information, review Sections 4.4.13.6 through 4.4.13.8.

Q: If I receive reimbursement for my accounting fees, will that count toward any contingency fee or flat fee balance with my accountant?

A: Yes. In the Sworn Written Statement for Claimant Accounting Support, your accountant or professional must certify that any Claimant Accounting Support reimbursement made by the Settlement Program on an hourly basis will count towards any amounts you owe to the accountant or the firm for any contingency fee or flat fee arrangement.

Accountants must sign the Sworn Written Statement for Claimant Accounting Support (SWS-38) in order to get reimbursed.

For more information, please visit the DHCC website.

Questions?

If you need additional information or have any questions, please feel free to contact Al Suffrin, CPA, LCPA Director of Communications.
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