In many commercial damage cases, there is a need to create the “but for” world – essentially a model that analyzes the financial implications of what would have happened “but for” an alleged bad act. In situations where the expert analyzes the “but for” world, they will invariably need to assess and apply assumptions.
Assumptions that experts typically consider may include:
When a Certified Public Accountant (CPA) considers how to evaluate and apply assumptions like those just discussed, they ultimately follow the professional standards that are applicable to CPAs who perform damage analyses, specifically:
The creation of a “but for” damage world requires the application of assumptions to model out what would have occurred “but for” an alleged bad act. Assumptions, however, cannot be applied blindly. As CPAs providing damage analyses services, the expert has a professional duty to critically evaluate the assumptions that are used, and to ensure that those assumptions are based on sufficient, relevant and objective data, all with an eye toward putting forward objective damage analyses that are the function of reliable principles and methods.