Essay on CPA REPORT
September 30, 2013
The manager of a large organization has asked the CPA to provide information to outside CPAs examining a subsidiary that has been set up as a corporation. As a part of their review, the outside CPAs want to be provided with the several explanations. The CPAs want to know the methodology used to determine deferred taxes and the procedures for reporting accounting changes and error corrections. The CPAs also want to know the rationale behind establishing the subsidiary as a corporation.
Methodology Used to Determine Deferred Taxes
The methodology used to determine deferred taxes deals with the basic principles of accounting for income taxes. According to FASB (2013), …show more content…
Members should accept the obligation to act in a way that will serve the public interest, honor the public trust and demonstrate commitment to professionalism.
Section ET 54 – Article III - Integrity
To maintain and broaden public confidence, members should perform all professional responsibilities with the highest sense of integrity.
Section ET 55 – Article IV – Objectivity and Independence
A member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services.
Section ET 56 – Article V – Due Care
A member should observe the profession's technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of the member's ability” (Professional Responsibilities).
The purpose of a review is to provide limited assurance that financial statements do not have any known errors or departures from the accounting rules found in GAAP. There is usually no testing of information in the financial statements beyond inquiry and analytical review. The CPA will not obtain an understanding of