Johnny Kan starts his investment consulting business on January 1, 2007. With scarce land resources in Hong Kong, many properties carry the nature of both business and residential purposes. Due to limited start-up funding, Johnny rents a flat in a multi-purpose building. Johnny and his parents use the office as their residential address. During the course of preparing his first annual report for year 2007, in order to reduce the tax liability, Johnny charges $200,000 as salaries paid to his parents. This gives rise to a loss of $50,000 for the financial year. Under the Hong Kong Inland Revenue Ordinance, the employer must file an annual employers return of remunerations with the Inland Revenue Department (IRD) to report the amount of salaries and other remuneration paid to all the staff during the year of assessment. In addition, all employers in Hong Kong must comply with all legal obligations relating to the Mandatory Provident Fund (MPF),which include enrolling all employees in MPF schemes and making monthly MPF contributions for them. The Hong Kong Labor Department also requires all employers to possess a valid employees compensation insurance policy to cover their employees. Mary Wong is the auditor of Johnnys company. When she goes through the documents and records, she finds employment agreements entered into with Johnnys parents and monthly acknowledgement receipts from his parents for the salaries paid by the company. According to the employment agreements, Johnnys father and mother are employed in the capacity of office assistant and janitor, respectively. However, Mary finds no evidence of the employers return submitted to IRD, MPF contributions and employment insurance for Johnnys parents. Do you think the salaries paid by Johnny to his parents are genuine and legitimate? Advise Mary about what she should do in this case.