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| Case study: Business Valuation Relating to Lifestyle Cost by Parente Randolph Accountants & Consultants Client Description: The client's husband owned a pharmacy. We represented the wife. The pharmacy was located in Brooklyn. The principal assignment was an evaluation of the lifestyle costs before the separation and a reconstruction of income to support the lifestyle. Key issues: The pharmacy was in a dangerous part of Brooklyn. The wife alleged that the husband had significant cash income and that he paid numerous people off the books. The books of the pharmacy were disheveled and located in a dark basement with but a single light bulb for light. The lifestyle was heavily funded with the use of cash. The pharmacy reported virtually no net income, and the owner took out an extremely modest salary. Methodology/strategy: We met with the wife who apparently had gone through a prior messy divorce. She was prepared for this one, however, because she had kept meticulous records of cash transactions and had kept receipts for things acquired with cash. We used the clients documents to reconstruct the lifestyle and add to the cash receipts the activity that we observed in checks and credit cards. To this, we added the obvious line items of lifestyle that appeared to not exist such as telephone. We attempted to locate the opportunity for the obtaining of cash at the pharmacy recognizing that a significant portion of the pharmacy's revenues were from prescription drugs. Using records of purchases of non prescription drugs and using current selling prices, we were able to quantify certain critical areas where it was clear that the revenues were not being reflected properly. We also looked to verify the amount of revenues being reported from the insurance companies versus the deposits by the pharmacy. Significant findings:
Results:
ParenteBeard LLC is a firm of Certified Public Accountants and Business Consultants in New York City. They can be reached at NJ (973) 428-3200, NY (212.244.5579), PA (215) 972-0701 or or via e-mail at henry.guberman@parentebeard.com. View their Divorce Magazine profile here. |
| Attorneys New York City: Stephen I. Silberfein |
| Susan Y. Kunstler |
| Wilentz, Goldman |
| Long Island: Steinberg & Early-Hubelbank PLLC |
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