The Eastern Economic Development Corporation (EEDC), a local communitydevelopment

office, operates a program called Business Assistance Service (BAS), a

mentorship program for entrepreneurs. The EEDC forms volunteer advisory boards of

three to five knowledgeable professionals. The advisory boards are then paired with

businesses requesting BAS. The service is available to businesses that have been in

operation for two to five years and the service can be provided for up to five years. BAS

volunteers meet with the owners of the business on a regular basis, critiquing the

business and offering suggestions for improvement. All aspects of the business are

considered: financial accounting, operations, strategic direction, marketing, finance, tax,

and human resources.

You, CPA, are a senior accountant with Black and White, Chartered Professional

Accountants. On July 30, 2016, you had your semi-annual performance review with

your partner, Bill Black. Bill noted that the firm values community service and would like

you to start working with organizations in your community in order to expand your

business knowledge and to make useful contacts who could one day become clients.

You have volunteered to become a mentor with BAS.

It is now August 5 and you will be meeting with the advisory board that you have been

assigned to by the EEDC. Your board has three other members: a lawyer, a marketing

professor and a successful small-business owner. Your first client, Security Plus Inc.

(SP), operates a security business and is new to the BAS program. The advisory board

has been given information from a meeting that the account manager at EEDC had with

Joe Rush, the owner of SP (Appendix I) and some background information from SP's

application to the BAS program (Appendices II, III and IV).

You are responsible for advising SP on the business profitability and tax aspects of the

business. Specifically, Joe is looking for tax advice on the treatment of his contractors

and on his EEDC loan, as well as advice on any other corporate or personal tax matters

you identify.

The other volunteers will look after GAAP compliance, marketing, finance, human

resources, strategic direction and operational issues. The advisory board will determine

a course of action for SP before meeting with the company. You have decided to review

the information on SP and draft a memo for the upcoming meeting with your fellow

volunteers.