Simco Automotive Pump Co., Inc. - Page 7




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          For Simco’s June 30, 1991 fiscal year, the review and compilation           
          was prepared by Judy Zaremba and Jane Brodsky.  Ms. Brodsky                 
          discussed the review and compilation with Mr. Boyer.  In                    
          addition, because she was aware that firms with operations                  
          similar to Simco’s commonly have scrap metal sales, she raised              
          the question of scrap metal sales with Mr. Boyer.  Ms. Zaremba              
          prepared a checklist, dated October 10, 1991, explaining some of            
          the reporting requirements used in the review and compilation.              
          Ms. Brodsky added the following handwritten note to the                     
          checklist:  “Scrap sales will be looked into by Wayne’s client”.            
          However, following the review and compilation, Mr. Boyer did not            
          raise the issue of scrap metal sales with anyone associated with            
          Simco.                                                                      
               Dix Scrap was audited by the Internal Revenue Service (IRS)            
          beginning sometime in 1992 and ending in October of the same                
          year.  While the audit was taking place, Mr. Brooks called                  
          individuals from whom he had purchased scrap metal for cash,                
          including John, and advised them that the IRS was auditing Dix              
          Scrap and examining documentation with respect to Dix Scrap’s               
          cash purchases.  After receiving the call from Mr. Brooks, John             
          called Mr. Boyer sometime between April and July of 1992, to                
          inform Mr. Boyer about the scrap metal sales that he had been               

               3(...continued)                                                        
          to ensure records are being kept properly.                                  





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