Core Components in Estimating Economic Damages for Individuals
CPA Journal, The › Vol. 79 Nbr. 2, February 2009
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Summary
Estimating economic damages is a type of litigation service provided by CPAs that utilizes a blend of accounting, economics, and finance, focusing largely on time-value-of-money concepts and analytical skills. A fact-finding questionnaire is an efficient way to gather the necessary data to estimate economic damages. The type of information requested often includes personal information, preinjury/death employment and earnings information, fringe benefits received, postinjury earnings and the likelihood of future employment, and household services provided before the injury/death and after the injury. Analyses prepared by medical experts must also be examined for factors that affect life expectancy; if life expectancy is reduced because of an accident, a CPA needs to consider the reduced time period to quantify the funds needed for future expenses. This article presents the essentials in the calculation to estimate economic damages for personal injury losses.
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Core Components in Estimating Economic Damages for Individuals
Estimating economic damages is a type of litigation service provided by CPAs that utilizes a blend of accounting, economics, and finance, focusing largely on time-value-of-money concepts and analytical skills. The discussion below focuses on the estimation of damages arising from personal injury, employment discrimination, and wrongful death. Each of these types of damages has mutual features of loss; many cases involving personal damages require quantification of net economic loss based on estimated lost earnings, lost fringe benefits, household services, and medical expenses. Each general category, however, has procedural differences in the calculation of damages. For example, personal consumption over a decedent's lifetime would red...
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