POLICIES & PROCEDURES

TENANT:  Tenant
CENTER: Mall/Shopping Center 
 
INTERNET RETURNS:

When computing reported gross sales, the Tenant deducts Internet returns.  The lease allows returns to be deducted from reported gross sales provided such sales were originally included in reported gross sales; however, these sales are made on the Tenant’s website and not at a store location.  The Tenant accepts Internet returns at any store location; however, the Tenant’s lease does not provide an exclusion or deduction for Internet returns.  This Tenant stated these returns are not tracked separately.

CATALOG SALE RETURNS:

The Tenant also deducted returns of merchandise purchased from a catalog.  The Tenant stated these returns are not tracked separately.

OTHER STORES SALES RETURNS:

The Tenant also deducted returns of merchandise purchased at other store locations.  The Tenant stated these returns are not tracked separately.  The total amount of store returns for the period under review is listed below:

     Lease Year Ended December 2000        $430,694
     Lease Year Ended December 1999        $393,277
     Lease Year Ended December 1998        $405,020

EMPLOYEE SALES:

The Tenant also stated that employee sales are included in gross sales at 100%; therefore, the examiner allowed the Tenant to deduct the full employee sale rather than the sale at a discount per the lease agreement.  The discount on these sales is extended to any staff member and immediate family, such as spouses and/or children and these sales are not tracked separately.

OTHER DISCOUNTS:

Not Applicable

AUDIT FEE RECOMMENDATION:

Based on the above, consideration should be given to billing the Tenant for the cost of this examination.