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BURNS, FIGA & WILL, P.C. <br /> Cheryl Linden <br /> June 9, 1995 <br /> Page 6 <br /> Pitkin Iron also advanced funds for parts, maintenance, repairs and fuel for the retained <br /> equipment owned by MCR and used extensively by MCR for reclamation, salvage and clean-up <br /> of MCR's properties. The request for reimbursement covers these advances as well. For <br /> example, invoices from Wagner Equipment for parts and service of the D-8N dozer and 980 <br /> loader were paid by Pitkin Iron. See Exhibit A, attached. This is necessary to keep the <br /> equipment operable and in use during a time when MCR had insufficient funds and no credit. <br /> 2. As to employee charges, I am unclear whether the people listed in the supporting <br /> documents were Mid-Continent employees or were Pitkin Iron employees used for <br /> Resources' benefit. Please provide an explanation of this situation. <br /> The documents show that the persons for whom charges were being sought did not <br /> work exclusively for Resources, but also did work for Pitkin Iron. Consequently, <br /> the costs of worker's compensation, and state and federal unemployment, etc. <br /> should be apportioned between Resources and Pitkin Iron. Was this done. If so, <br /> please provide an accounting reflecting the appointment. <br /> Also, the documents indicate that the cost of health insurance coverage for the <br /> people listed was apportioned between Resources and Pitkin Iron. However, there <br /> appears to be a discrepancy concerning Lew Thompson's health coverage. Pitkin <br /> Iron seeks to be paid for health coverage for Lew Thompson from September 1993 <br /> through February 1994. However, the billing statements from Central Benefits <br /> to support the request for payment do not list Mr. Thompson as being covered for <br /> health insurance for those six months. Please explain this discrepancy. <br /> Response: MRC has no employees. In the documentation provided, Section 1.4, Employee <br /> Payroll, gives an extensive itemization describing the activities of the employees and allocating <br /> their time between MCR and Pitkin Iron. <br /> Payroll costs, including insurance, workers' compensation, payroll taxes and benefits, <br /> have been apportioned between MCR and Pitkin Iron according to the number of hours worked. <br /> Charges to MCR are based on the hours worked for MCR and an extensive itemization is <br /> contained in the documentation provided as follows: <br /> Section 1.3 details workers' compensation, and state and federal unemployment costs for <br /> employees engaged in work for MCR and the proportion of the total cost which is charged to <br /> MCR based on hours worked for MCR. <br /> Section 1.4 documents monthly payroll charges, itemized by employee according to the date, <br /> hours and work performed. This is the basis of the apportionment of payroll costs charged to <br /> MCR. <br />