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& Procedure Manual (warranty manual) and submitted valid warranty
claims.
The warranty manual provides detailed instructions to
petitioner’s dealers which guide them in the administration of
petitioner’s warranty liabilities. It also contains the
procedures for obtaining reimbursement for providing warranty
service. The warranty manual requires dealers to obtain
authorization before proceeding with certain warranty repairs.
It also provides an appeal procedure for dealers to appeal claims
when petitioner has paid less than the full amount of the claim
or refused to pay.
In certain circumstances, the warranty manual requires
dealers to return defective parts or materials to petitioner.
The warranty manual warns dealers that petitioner has adjusted,
denied, or charged back to the dealers a significant number of
claims because improper packaging of the returned parts resulted
in missing or mutilated material and/or claims.
Petitioner's corporate internal audit department
periodically reviews warranty payments to dealers. These reviews
sometimes result in petitioner’s determining that the dealers
have received warranty cost reimbursements to which they are not
entitled. Petitioner charges the dealers for the amounts of such
reimbursements.
Discussion
Whether a business expense has been "incurred" so as to
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Last modified: May 25, 2011