1. You are investigating possible hidden income in a divorce dispute involving an automobile repair shop with five bays. There are five mechanics, charging approximately $60 per hour for 7 hours per day. Assume 315 days worked with each person’s wage of $30 per hour for 8 hours. Computer gross profits for the year. If the owner reports $42,500 of gross income, what is your opinion?
2. Go to the IRS’s ATG for Gas Retailers and determine some of the initial interview questions to help a forensic accountant to accurately estimate the income from a service station.
3. Explain proactive auditing. Compare with reactive auditing. Give specific techniques.
4. What are some ways that a forensic accountant gathers evidence?
5. What are some red flags of phantom vendors?