FORM 8
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934
National Capital Management Corporation
(Exact name of registrant as specified in its charter)
AMENDMENT NO. 2
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its
Current Report on Form 8-K, dated November 10, 1995 as set
forth in the pages attached hereto:
Item 4. Changes in Registrant's Certifying
Accountant
Amending Item 4.(a)(iv) to read:
During the years ending December 31, 1993 and
1994 and the interim period of January 1, 1995
through Ernst & Young LLP's resignation on November
10, 1995, the Registrant had no disagreements with
Ernst & Young LLP on any matter of accounting
principles or practices, financial statements
disclosure, or auditing scope or procedure.
Amending Item 4.(a)(v)(A) to include specific
steps the Registrant took to rectify each of the
reportable conditions set forth in Attachment A to
the March 24, 1995 letter from Ernst & Young LLP to
the audit committee.
Item 7. Financial Statements and Exhibits
Amending accountant's letter to Item (7).(c)(16)
to include whether or not there were any
disagreements with the Registrant.
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this amendment to be
signed on its behalf by the undersigned hereunto duly
authorized.
NATIONAL CAPITAL
MANAGEMENT CORPORATION
(Registrant)
Date: November 29, 1995 By:/s/ Leslie A. Filler
Leslie A. Filler
Principal Financial Officer and
Principal Accounting Officer
<PAGE>
Item 4. Changes in Registrant's Certifying Accountant
Regulation S-K Item 304
(a)(1):
(i) Registrant's principal accountant, Ernst &
Young, resigned on November 10, 1995.
(ii) Ernst & Young LLP has not issued a report on
Registrant's financial statements during the past
two years that contained an adverse opinion,
disclaimer of opinion, modification or
qualification.
(iii) N/A.
(iv) During the years ending December 31, 1993
and 1994 and the interim period of January 1,
1995 through Ernst & Young's resignation on
November 10, 1995, the Registrant had no
disagreements with Ernst & Young LLP on any
matter of accounting principles or practices,
financial statements disclosure, or auditing
scope or procedure.
(v) (A) Ernst & Young LLP issued a letter to
the Registrant with respect to its audit of the
Registrant's financial statements for the year
ended December 31, 1994 which contained
reportable conditions regarding two of the
Registrant's subsidiaries, National Capital
Benefits Corporation ("NCBC") and Jensen
Corporation ("Jensen"). The Registrant believes
it has implemented measures that will prevent
the recurrence of such conditions at NCBC and
that prevented such conditions at Jensen until
it was sold on November 10, 1995.
Jensen - Jensen's controller, who had been
employed by Jensen since its acquisition in 1992
by the Company, left Jensen near the end of
1994. Jensen's chief operating officer then
hired his replacement. After the problems with
the audit were known, the Company's chief
financial officer conducted a search and hired a
qualified controller, with over 12 years of cost
accounting experience, for Jensen in May 1995.
Shortly after her employment, the controller
began the process of addressing problems within
Jensen.
In July 1995, the Company performed an internal
audit of Jensen. During this audit, the
material general ledger accounts were verified
to be reconciled, inventory standards and
reserves were reviewed and determined to be
proper, internal control procedures were being
addressed, revenue cutoff was tested and
determined to be proper and a system had been
implemented to ensure that payroll tax returns
would be filed currently. Through routine
contact with the controller, the Company was
satisfied that proper procedures were being
followed subsequent to this audit.
The new controller was directed by the Company
to establish a new accounting position to
enhance the accounting and control function at
Jensen, and, as a result, an assistant
controller was hired in October 1995 with an
appropriate level of accounting experience.
NCBC - Since the viatical settlements division
was a new business for the Company in 1994, many
issues were not fully addressed until the year
end audit. During the audit, these issues were
studied and changes were implemented under the
guidance of Ernst & Young LLP.
As a result of the Company's requirement to
implement stronger controls and a need to have
more qualified personnel, an individual was hired
in June 1995 to handle the accounting, reporting
and management functions. This individual is a
CPA and began his career in the auditing and
management consulting divisions at one of the big
six accounting firms. He has since held various
financial and executive positions with numerous
entities. The NCBC officer who was previously
in charge of the accounting, reporting and
management functions left NCBC in July 1995.
(B) None.
(C) See (A) above.
(D) None.
Ernst & Young LLP Suite 400 Phone 510 977 2900
2175 North California Blvd.
Walnut Creek
California 94596-3579
November 29, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have read Item 4 of Form 8-K/A, Amendment No. 2 dated
November 29, 1995, of National Capital Management
Corporation and are in agreement with the statements
contained in paragraphs 4.(a)(1)(i),(ii),(iv) and the first
sentence of (v)(A) therein. We have no basis to agree or
disagree with other statements of the registrant contained
therein.
Regarding the registrant's statement concerning the lack of
internal control to prepare financial statements, included
in the first sentence of paragraph 4.(a)(1)(v)(A) on page 1
therein, we had considered such matter in determining the
nature, timing and extent of procedures performed in our
audit of the registrant's 1994 financial statements.
/s/ERNST & YOUNG LLP
