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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 9, 1997
GILMAN & CIOCIA, INC.
(Name of small business issuer in its charter)
Delaware 000-22996 11-2587324
(State or jurisdiction Commission (I.R.S.Employer
of incorporation or file Identification
organization) number No.)
475 Northern Boulevard, Great Neck, NY 11021
(Address of principal executive offices) (Zip Code)
(516) 482-4860
(Issuer's Telephone Number, Including Area Code)
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ITEM 4. Changes in Registrant's Certifying Accountant.
BDO Seidman, LLP was dismissed as the principal independent accountants
of Gilman & Ciocia, Inc. (the "Company") as of September 9, 1997. Such former
principal accountant's report on the financial statements of the Company for the
prior year did not contain an adverse opinion or disclaimer of opinion, and was
not modified as to uncertainty, audit scope or accounting principles. The
decision to replace the Company's independent accountants was made by the
Company's Board of Directors. There was no disagreement with the former
accountants, either that was resolved or that remained unresolved, on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure.
On September 9, 1997, the Company engaged Arthur Andersen, LLP as its
new principal independent accountants.
BDO has submitted a letter dated September 18, 1997 (the "BDO Letter")
addressed to the Securities and Exchange Commission, which is filed as an
exhibit to this Amendment to Form 8-K/A. The BDO letter, in addition to stating
that BDO agrees with the statements in this Item 4 above insofar as they relate
to BDO, advises the Securities and Exchange Commission that the "Company was
provided with a copy" of "a draft management letter" that listed areas in the
Company's internal controls that BDO felt should be improved.
The draft management letter was initially delivered in March 1997, not
to an officer or director of the Company, but to the
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Company's controller, more than five months after BDO's finalization of the
Company's June 1996 audit, after BDO had assisted the Company with two Quarterly
Reports on Form 10-QSB and a registration statement, and after the Company had
protested BDO's billing, which was in excess of three times BDO's estimates. BDO
never consulted with outside members of the Audit Committee of the Board of
Directors pursuant to Statement on Auditing Standards #61 or with regard to the
issues purportedly raised in the draft management letter and never delivered it
to any outside member of the Audit Committee of the Board of Directors, even
though the draft management letter was purportedly addressed to such Audit
Committee.
BDO did not deliver a copy of the draft management letter to an officer
of the Company until June 1997, after more serious questions had been raised
regarding BDO's bills.
In addition, when the draft management letter, which was never
delivered in signed form, was initially delivered in March, it was back-dated to
January 1997, and, therefore, appeared to be an attempt by BDO to justify the
extent to which its bills exceeded its earlier estimates by blaming the
Company's controller's office.
Following BDO's termination, the draft management letter was delivered
by the Company to the full Audit Committee of the Company's Board of Directors,
which met to discuss it and resolved that the Chief Operating Officer should
investigate the validity of the concerns raised in the draft management letter
and work with Arthur Andersen LLP, the Company's new independent accountants, to
remedy any deficiency in the Company's internal controls, with further review at
the next meeting of such Audit Committee.
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(c) Exhibits
Exhibit No. Description
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16 Letter On Change In Certifying
Accountant, dated September
18, 1997, from BDO Seidman,
LLP to the Securities &
Exchange Commission
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Amendment No. 1 to the report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Dated: September 22, 1997
GILMAN & CIOCIA, INC.
By: /s/ Thomas Povinelli
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Thomas Povinelli
Vice President (authorized signatory)
Chief Operating Officer
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EXHIBIT INDEX
Exhibit No. Description
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16 Letter On Change In Certifying
Accountant, dated September
18, 1997, from BDO Seidman,
LLP to the Securities &
Exchange Commission
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[BDO SEIDMAN, LLP LETTERHEAD]
September 18, 1997
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Gentlemen:
We have been furnished with a copy of the response to Item 4 of Form 8-K for
the event that occurred on September 9, 1997, filed by our former client,
Gilman & Ciocia, Inc. We agree with the statements made in response to that
Item insofar as they relate to our Firm except that the Commission should be
advised that.
The Company was provided with a copy of a draft management letter listing,
among other things, various material weaknesses of internal controls, for
preliminary review by management. BDO sought management's comments regarding
the management letter on numerous occasions. BDO also requested on two
occasions that the Company convene an audit committee meeting to discuss the
management letter in order for it to be finalized. Through the date of our
termination, the Company had not arranged for such a meeting nor responded to
our management letter. Such management letter, cited among other concerns, the
following:
a) the absence of documentation in the corporate minutes of
compensation to officers/stockholders and stock option grants;
b) the audit committee of the Company's Board of Directors being
comprised of two outside directors and the Company's Chief Operating
Officer and Chief Financial Officer when BDO believes it should
consist only of outside directors;
c) the lack of support for the recording of vacation and sick pay
accruals, proper accounts receivable records and adequate records to
support the recording of certain transactions to the general ledger;
d) the inadequate review process by management;
e) the lack of segregation of duties among employees in certain areas;
f) the need for the Company's personnel to increase their knowledge and
familiarity with existing and recently issued accounting
pronouncements, tax law and SEC regulations.
Very truly yours,
/s/ BDO Seidman, LLP
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BDO Seidman, LLP
