TABLE OF CONTENTS

CHAPTER 1 -- INTRODUCTION

• Scope of Industry Audited 1-1
• Purpose and Nature of the Information in This Report 1-1
• Illustration of the Related Transportation Industries 1-2
• Corporate Issues 1-3

CHAPTER 2 -- GENERAL BACKGROUND INFORMATION

• U.S. Customs 2-3
• State Agencies 2-4
• Public Utilities Commission (PUC) 2-4
• Interstate Commerce Commission (ICC) 2-3
• Government Regulation 2-1
• Federal Maritime Commission (FMC) 2-4
• Federal Agencies 2-3
• Effect of Government Regulation on Audit 2-4
• Effect of Deregulating 2-2
• Department of Transportation (DOT) 2-3
• Department of Motor Vehicles (DMV) 2-4

CHAPTER 3 -- PLANNING THE AUDIT

• Tour of the Business Premises 3-6
• Site of the Examination 3-6
• Related Party Transactions 3-3
• Pre-Audit Planning 3-1
• Initial Interview Questions 3-7
• Initial Interview 3-6
• Information Document Requests 3-5

CHAPTER 4 -- OPERATIONS AND ACCOUNTING RECORDS

• Unreported Financial gain 4-6
• Types of Shipments 4-39
• Types of Independent Contractors 4-26
• Types of Freight Forwarders 4-37
• Transactional Analysis 4-46
• Tariffs 4-1
• Sources of Revenue 4-5
• Shipper's Agents 4-34
• Selection of Subhauler Returns for Audit 4-26
• Schedule 4-13
• Railroad Rebates 4-35
• Petroleum Carriers 4-16
• Penalties 4-49
• Payables 4-15
• Other Liabilities 4-15
• Operating Authority 4-26
• Operating Authority 4-1
• Multiple Owner-Operators Exploitation the Same DBA 4-33
• Licensing Requirements 4-46
• Leased Employees 4-22
• Labor Leasing Companies 4-21
• International Issues 4-43
• Insurance Premiums 4-42
• Insurance 4-49
• Independent Contractors 4-25
• Gain or Loss on Foreign Currency Transactions 4-41
• Freight Forwarders 4-37
• Customhouse Brokers 4-45
• Contract Carriers 4-2
• Common Carriers 4-1
• Agent - Principal Relationship 4-34
• Accounting or Transactional Cycle 4-3

CHAPTER 5 -- EMPLOYMENT TAXES

CHAPTER 6 -- EXCISE TAXES

CHAPTER 7 -- PENALTIES