Question Ellie as to whether she is an officer of the corporation that conducts business as
The Roasted Duck (generally the spouses are listed as corporation officers even though
they don’t work actively in the firm; if she doesn’t know, look for evidence in filings with
state regulatory agencies). If she is an officer, then would be able to request copies of the
tax returns (sales, income, and payroll) and any financial statements that are submitted to
banks for loans provided to the corporation. However if Cary is skimming cash sales and
are not reporting it to authorities of taxation or to banks when applying for bank loans,
using indirect methods, for instance the net worth method, could be helpful in estimating
the amount of money not reported. Furthermore, surveillance may also be used to
determine the vehicles used in the business; especially, if newly-purchased (be careful, that
it could be leased) vehicles are used the “I’m not doing well” message of the husband would
not sound as credible.
The husband, Cary, must be deposed to ascertain on thoughts that why the business is not
doing well. The statements should be checked out. For instance, if he asserts that the traffic
through his restaurant is too down for him to be successful, counting those who enter and
exit the restaurant can be noted and an estimated level of gross sales can be calculated. A
copy of the menu can be helpful in fixation of the sales prices of product and, while posing
as a consumer, a forensic accountant may ask waiters what they consider to be the most
famous items could also help. A forensic accountant and the associates may also pose as
survey takers outside the restaurant for asking patrons regarding their habits and, in
particular, what they placed ordered in the restaurant. It may allow them to develop a
appropriate estimation of revenues. Now as the restaurant is not a chain restaurant,
obtaining a profit percentage that can be applicable to an approximate of the gross sales is
difficult. If the forensic accountant has friends who are the owner of restaurants in the area
or who are accountants for restaurants, may ask them for an average net profit
percentage.
If for a moment the assumption is made that the valuation is correct, Cary might have other