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Category: Business and Industry
Date Submitted: 11/29/2013 11:54 AM
CPA Report
Stephanie Simmons
ACC/545
Deborah Ashbury
Monday, February 25, 2013
MEMORANDUM
TO: Outside CPA’s
FROM: Stephanie Simmons
DATE: February 25, 2013
SUBJECT: CPA Report
CPA Report
Understanding the responsibilities of the CPA is important. This is especially true in regards to the differences between a review and an audit. Since the subsidiary in question has recently been established as a corporation, it is my duty as a CPA to inform management that there are different questions that will arise while examining the newly implemented corporation. Such as the methodology used to determine deferred taxes, the procedures for reporting accounting changes and error corrections, and the rationale behind establishing the subsidiary as a corporation.
As a CPA, a professional needs to abide to a very strict code of conduct that needs to be followed while providing professional services to companies and individuals. CPAs must adhere to the American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct. The AICPA Code of Conduct covers the areas of responsibility, the public interest, integrity, objectivity and independence, and due care. The idea behind the code of conduct relies in the significant level of public confidence of the services that are provided by the professional. CPAs need to conduct themselves in a very responsible manner, always safeguarding the information provided and establishing a good relationship with clients and alike.
Deferred Taxes
Accounting for taxes and tax expense is extremely important to the company.
Fundamental differences exist between accounting for taxes and the financial reporting of pretax income. Pretax financial income is calculated according to generally accepted accounting principles (GAAP) and taxable income is calculated using Internal Revenue Service (IRS) rules (Kieso, Weygandt, & Warfield, 2007). “Deferred tax assets represent taxes that have been paid (or often the...