Auditing and Financial Management:
Audit of the House Beauty Shop, Calendar Year 1976
GGD-77-54, Jun 8, 1977
The accounts records provided by the House Beauty Shop, which were maintained on a cash basis, were adjusted to present the Shop's financial position and results of operations on an accrual basis. These statements do not include the cost of certain benefits and services, such as rent and utilities, which the Shop does not pay.
The Select Committee on the House Beauty Shop entered into a fixed-fee contract with a manager to operate the shop. As of December 31, 1976, the manager employed nine hair dressers, two manicurists, an assistant to the manager, and two receptionists on a full-time basis; and eight hair dressers, a manicurist, two maids, and an electrologist on a part-time basis. The comparative statement of operations shows a net income of $3,696 for 1976 after payment of $7,350 in bonuses compared with a net income of $6,596 in 1975 after payment of $2,520 in bonuses. After restoring any impairment of capital and providing for replacement of equipment, net income must be transferred to the general fund of the U.S. Treasury. For 1976, this amount was $1,875.07; and accumulated since 1969, the total amount was $36,323. Recommendations made in the 1975 audit report have been implemented, except for tax deductions for some employees which were not in accordance with tax withholding authorizations.