Simco Automotive Pump Co., Inc. - Page 6




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               During the years in issue, Dix Scrap purchased scrap metal             
          belonging to Simco as follows, with all payments in cash made               
          directly to John, which he retained:                                        
               Period relating                      Total number of                   
               to Simco’s year     Total amount      separate sales                   
               July 1, 1989 -      $62,699        63                                  
              June 30, 1990                                                          
               July 1, 1990 -      80,589              106                            
              June 30, 1991                                                          
               July 1, 1991 -      33,870              60                             
              Dec. 31, 1991                                                          
               Period relating                                                        
               to John’s year      Total amount                                       
               July 1, 1989 -      $21,258                                            
               Dec. 31, 1989                                                          
               Jan. 1, 1990 -      79,351                                             
               Dec. 31, 1990                                                          
               Jan. 1, 1991 -      76,550                                             
               Dec. 31, 1991                                                          
          Neal’s Discovery of the Scrap Metal Sales                                   
               Simco’s accountant was Wayne Boyer.  Mr. Boyer prepared                
          Simco’s, as well as John’s and Neal’s, tax returns and kept                 
          Simco’s books.  However, Mr. Boyer was not a certified public               
          accountant.  Thus, once a year, Mr. Boyer would ask another                 
          accounting firm to do a review and compilation of Simco’s books.3           

               3 A compilation involves putting a business’ financial                 
          information into a financial statement format.  A review involves           
          analytical procedures, such as comparisons of financial ratios,             
                                                             (continued...)           





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