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Consultants, including the cash receipts journal, the cash
disbursements journal, the petty cash journal, and the payroll
journal for that year, but they failed to mention the invoice
log. At the September 1989 meeting, petitioners also informed
Mr. Kaply about the existence of the Indian Head business savings
account and told him that all of the deposits made into that
account were transferred from the Indian Head business checking
account. Petitioners did not inform Mr. Kaply at the September
1989 meeting that they deposited checks received by Design
Consultants directly into the Indian Head business savings
account.
At the September 1989 meeting, petitioners and Mr. Dennett
provided Mr. Kaply with some of the documents requested in the
appointment letter that Ms. Lyle had sent to Mr. Dennett. They
did not provide Mr. Kaply with the cash receipts journal for 1987
or bank statements for the Indian Head business savings account,
the Kennebunk personal savings account, and the Seabrook Proper-
ties account. In fact, Mr. Kaply was not even aware at the
September 1989 meeting that the Seabrook Properties account
existed. He subsequently learned of the existence of that
account during the course of his examination of petitioners'
taxable year 1987 when he found that petitioners deposited checks
written from the Seabrook Properties account into their Indian
Head personal checking account.
At the September 1989 meeting, Mr. Kaply asked Mr. Dennett
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