The BERO Group Publications

Economic Damages, CPAs and
a Bowl of Ice Cream


By Ronald A. Bero, Jr. , CPA/ABV, CFF
May 2021

The majority of economic damages experts I am aware of are either CPAs or academics.
Why are economic damages experts often CPAs?

What makes some CPAs uniquely qualified to be
good economic damages expert witnesses?

This question has been stuck in my head for a while. As a not quite retired ultra-runner who spends hours alone in the woods, I have a lot of time for these stuck-in-my-head kinds of thoughts. On a recent run, it seemed I had solved this question when I thought about a bowl of ice cream.

Bowl of Ice Cream

My initial fleeting thought on this was CPAs are ideally qualified to quantify damages because they live in a double entry kind of world. For every debit, there is a credit, and for every credit, a debit. Whether it’s two-sided or double-entry bookkeeping, everything – always – is in balance. An out-of-balance trial balance is as impossible as a flying pig. For every “if,” a perfect “then.” Like a bowl of ice cream!  If you give someone a bowl of ice cream, then they are happy. Perfect balance. Happy is the perfect credit to the debit of ice cream. 1

As I continued running, I thought more about the bowl of ice cream. Fat free ice cream…butter pecan ice cream…the theory was starting to slip away. What about the market of potential bowl of ice cream consumers out there? Someone could be lactose intolerant, vegan, diabetic or only eating an antiangiogenic diet. Or the recipient could just already be really full. I realized that a bowl of ice cream does not always equal happiness. It turns out a bowl of ice cream is not always a perfect credit, bowl of ice cream, and debit, happiness. The system in which a CPA operates does not necessarily uniquely qualify them to be a damages expert. My perfect analogy had slipped away just a short way down the trail.

However, with the proper experience, CPAs understand business. CPAs know that for every if (debit / credit), there must be a proper then (credit / debit). 2  Many CPAs have analyzed business successes or failures for years. Many CPAs have prepared budgets and projections based on market factors and know how those factors trickle through the business from the top line (revenue) to the bottom line (profit). Many CPAs have analyzed acquisition targets and studied whether any acquired companies, and the projections made therefor, either did or did not meet expectations. CPAs analyze and figure out what can happen, what did happen and what should have happened.

Maybe it’s as simple as some individuals who are curious – who want to know if this, then what – pursue accounting degrees. A chart of accounts is like a sketch of a house, or the picture of a puzzle on a puzzle box, or the tiny, detailed instructions that used to come with model airplanes. CPAs have their framework, have the facts and the story, and can neatly categorize, analyze, record and ultimately recall what happened in the form of dollars and cents, via their debits and credits.

In litigation, in the actual-world, the breach or infringement occurred. If, in the should-have-been-world, where the breach or infringement did not occur, then, according at least to the plaintiff, the plaintiff would be happy (or happier) and rich (or richer). However, like the bowl of ice cream scenario, there are other factors and a broader market to consider and understand. I will likely think about this on my next long run, since I still have many questions. But first, I have a bowl of ice cream (not butter pecan!) to eat.

NOTE: The opinions and thoughts expressed herein are the opinions of Ronald A.Bero, Jr.  They are not necessarily the opinions of The BERO Group.

1  In this I am referring to, for example, standard “run of the mill” matters such as breach of contract, patent infringement, fraudulent transfer, wrongful death, breach of fiduciary duty or the like.

2  Assumes the “if” does not yield the necessity of an “and if” to then get to the “then.” Might I add here, those then/than challenged individuals out there should really be reading this article.

Ronald A. BeroFor more information about Ronald A. Bero, Jr.
and The BERO Group visit us here.