Cpa Report

Re: CPA Report

This memo is in response to the request for information from the outside CPA firm examining a subsidiary that has been set up as a corporation. In this memo, I will explain 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. I will also cover the professional responsibilities of a CPA, and the differences between a review and an audit.

The professional responsibilities of a CPA

Accountants are expected to maintain a high level of ethical conduct. The reason for this high level of ethical conduct is the need for public confidence in the quality of services provided by the profession (Schroeder, Clark, & Cathey, 2005). The American Institute of Certified Public Accountants (AICPA) established a Code of Professional Conduct to ensure public confidence in the quality of services provided by CPAs (Schroeder, Clark, & Cathey, 2005). The principles of professional conduct include guidelines on responsibilities, public interest, integrity, objectivity and independence, due care, and scope and nature of services. The principle of responsibilities requires the CPA to perform their responsibilities as professionals, by exercising sensitive professional and moral judgments on activities (AICPA, 2013). The principle of public interest requires the CPA to approach duties in a way that serves the public interest, honors the public trust, and demonstrates commitment to professionalism (AICPA, 2013). The principle of integrity requires the CPA to maintain and expand public confidence, and execute professional duties with the highest level of integrity (AICPA, 2013). The principle of objectivity and independence requires the CPA to be free of conflicts of interest and independent in fact and appearance when performing audit and attestation services (AICPA, 2013). The principle of due care requires the CPA to perform...