CPA confusing requirements

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Reply to
Joe Canuck
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The world is yours... You obviously are so well versed in business, economics and law? Harvard? Yale?

You must have your CPA, JD/LLM and MBA?

Good luck.

P.S. Let me know when you perform some financial audit services without a license. Only a Class 5 Felony in Arizona (Class 4 if you dealt with a securities related company). I would love to see you prove the state wrong, in fact I would contribute to your defense fund.

Reply to
brecker

Listen retard, you don't know WTF you are talking about. Furthermore, you don't even know what the word "audit" means.

Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.

What this means, you ignorant piece of crud, is that by auditing you are using a system to find out if what a company claims on it's books is correct or not.

Anyone can do this. If you have ever spent anytime working in the real world you wouldn't need me to explain this to you. If you had ever worked in public accounting you would see all sorts of books making all sorts of ridiculous assertions. You would know how common this is and that these people aren't criminals they are just ignorant, like you.

When some joker brings in his books, for you to pay his taxes. You must do an informal audit and find any material mistatements in order to pay their taxes, you lying first year accounting student know-it-all scum bag.

Reply to
Chinvat

"Chinvat" wrote

Clearly that is untrue. Tax preparation is not an audit step, and a there are no audit steps that need to be taken to prepare a tax return.

I'd say that, if anything, the steps taken in tax preparation more closely relate to review processes. Making inquiries of the client, instead of verifying with third parties.

And clearly, something that may be perfectly legitimate on the books of the business, may not be a deductible item for taxes.

Reply to
Paul Thomas, CPA

No. You can't pay someone's taxes if you don't know how much money they made. You can't know how much money someone made if their are material mistatements in their financial statements. The overall objective of an audit is to find material mistatements. Therefore, an audit is a step in tax return preparation.

Maybe in a textbook, but in real life, managers think they can do their own accounting or you get companies that hire people like brecker to do their accounting. Either way, you need to do at least a test of balances and check for misclassifications. If you are not doing this for your clients, I don't think you are providing quality accounting services.

Duh, but in order to get the books to tax basis, you must first have them in some recognizable accounting format.

Reply to
Chinvat

"Chinvat" wrote

That's so wrong. There is no obligation to perform an audit of the clients records in preparing a tax return. To even suggest that you perform an audit is opening yourself up for a lawsuit.

You don't have to perform an audit to get to that point.

Reply to
Paul Thomas, CPA

You seem not to know the difference between audit and attestation. In an audit you are finding material mistatements, in attestation you are writing a formal report expressing an opinion on the reliability of another party's assertions.

If you write a report stating someone's F/S are reliable and they are not you can be sued for negligence. If you audit a company before doing their taxes, as long as you do not attest to the reliability of their books, you are helping them avoid legal reprecussions.

If you don't correct material mistatements on your clients books, they are not paying their taxes on the money they owe, but a fictious amount. Given this, you might as well make up some numbers, if that is level of service you are going to provide.

Right, but in order for a client to pay taxes on the income they made and not a fictious amount, you must perform an audit of sorts. Maybe not a formal, go to their business - type of audit, but some kind of audit.

Reply to
Chinvat

In Ontario Canada (and I think all if not most provinces), any accountant (CA, CMA, CGA) can perform a review engagement or an audit. Only a licensed CA (changing soon) can perform and sign off on an audit of a publicly traded corporation (and NFP). Closely held companies, proprietorships and partnerships are not required to have such. I would imagine it is the same for the US in most states as well.

Stephanie

Reply to
Stephanie Serba

You are right...

I got sucked into a conversation with an idiot and I guess I just assume that if you are doing an audit you are going to issue an "Independent Auditors' Report". Thereby performing independent financial attestation services which are regulated by the States and restricted, in most states, to those licenced by the state.

I would be interested to know what is chaning. I always thought that licensed Chartered Accountants were the only ones allowed to issue audit opinions. Are they going to allow CMAs?

Reply to
brecker

Tax preparers can prepare a return with no support what so ever. There is no State or Federal (IRS) statute that requires they even assess it for reasonableness. Tax prepares are not auditing (attesting) to the information, they compile it based on the information provided. So, to prepare taxes you perform no audit what so ever, some perform a review, i.e. analytical procedures to gain comfort on the reasonableness of the numbers. However, only if the client pays for it. The majority, and I would say almost all non-cpa tax prepares just take the information and plug it into Lacerte/TurboTax. (not trying to be stereotypical, but it is about the volume)

Also, most State statutes and generally accepted auditing standards (GAAS) define an audit as an attestation, which is why States, by statute, regulate those services. So where you get an audit is not an attestation service, I have no idea. That is contrary to GAAS.

GAAS states that the purpose of an (external) audit is to express an opinion, which makes financial audits the highest level of attestation services. Maybe you missed that because you didn't make it through the first day of auditing, assuming you ever took the class. Here is a summary:

Audit = positive assurance = attestation = requires independence (opinion) Review = negative assurance = limited attestation = requires independence Compilation and tax = no assurance

I think I figured out where the confusion was earlier, I guess I assume that an audit = opinion, which requires a license by the State. You are right, anyone can perform an audit, but they can't give the opinion (attestation) as an independent auditor. Thus, the value of the CPA license.

So, why don't you come back after you get your head out of your ass. I guess if you don't agree, the rest of us, the AICPA and States must be wrong.

Reply to
brecker

  1. It is unethical for any accountant to use erroneous information while preparing a tax return, scumbag.
  2. It violates the AICPA's Code of Professional Conduct.
3.Besides statutory law, there is something called common law that you may want to look into. Using false information in preparing a tax return is at least ordinary negligence and at the very absolute minimum, you must inform the client that their is a problem with their source information.

I don't know what almost all tax preparers do, I worked for a large CPA firm and I know what I did and was expected to do. Small tax preparers aren't held to the same standards as they don't have the expertise to audit F/S plus they only do individual returns, which don't have F/S anyway.

Committee on Basic Auditing Concepts, Statement of Basic Auditing Concepts AAA, page 2. Also, if you have actually ever read the GAAS, there is a seperate section for auditing and attestation. Attestion services include: audit of F/S, report on client's internal control structure, review of private company's F/S, examination of prospective F/S and application of agreed-upon procedures on specific elements, accounts or items of a F/S.

There are no state statues that regulate audits. The SEC regulates audits of publically traded companys. State boards of accountancy grant and revoke licensure. The CPA is supposed to be a mark of quality not a legal requirement. Since it is easier to prove something exists than doesn't exist, if you knew what you were talking about you would find the relevant statute and link to it.

The auditing standards board only issued 10 GAAS and 93 SASs. Compliance with the ASB is only required for members of the AICPA. I don't where in the GAAS, you are seeing this, but there is a bit of a difference between giving an opinion and writing a formal report that attests that a company's assertions are valid.

brecker = retard brecker = idiot brecker = doesn't know what he is talking about

You are just plain wrong.

no, license required.

Nope, your problem is you fell for a common misconception and can't believe such a commonly held belief is wrong. The CPA license is supposed to be a mark of quality to protect consumers from incompetant accountants. It is not enforced by statute.

You are obviously suffering from delusions. I do admire your confidence though. If I had half the confidence you have, there would be no stopping me. If I didn't know that you were such an idiot, I would completely think you knew what you were talking about. You smug little weeny.

Reply to
Chinvat

"brecker" wrote

To imply that ~ANY~ audit measures are performed in a tax engagement opens the door for legal troubles.

Reply to
Paul Thomas, CPA

"Chinvat" wrote

Look up the word "knowingly".

Look up the word "knowingly".

Look up the word "knowingly".

A client can tell us they are self-employed, provide a set of financials that look correct, they provide us with an EIN and other tax numbers and provide all other information asked for. What do you do, believe the information on it's face and prepare a tax return ~~based on the information provided~~ or do you immediately go out and perform a series of audit measures to provide some level of assurance (to yourself) that the information provided is correct.

Client comes in, says he sold his Goodwrench stock that was gifted to him by his granddad back when he was 12, and granddad got it some 25 years before that. "Here is the basis information that granddad gave me", he says. Do you immediately find a psychic to confirm with granddad, who died 8 years ago, or do you spend 32.7 hours researching the historical data on the Goodwrench stock to see if the basis is plausible, or do you take their word for it and enter the numbers provided.

Or the client comes in and says that they are divorced, and they get to claim the kid every other year. "Here's the signed documents from the ex", the client says. Do you immediately contact the ex and grill them on the issue, or do you prepare the return based on the information provided by the client.

Client comes in and hands over all their tax related documents. While scanning the prior year return you notice they had interest income from the Bank of Banks in "04" but they didn't bring you any 1099 from the Bank of Banks reporting any "05" interest. You ask the client about it and they said they closed that account in "04". Do you immediately contact the bank and demand that they provide third party verification on that, or do you take the clients word and prepare the return from the information provided by the client.

Reply to
Paul Thomas, CPA

Again, I give up... I will concede... This is pretty much semantics.. You can sure copy stuff out of books very well, but obviously have either little or no experience. The rest of us in the real world (with our certifications and degrees) are, as you put it, disillusioned idiots. Why did I (we) spend those years getting degrees in business, economics and computer science, not to mention related certifications, when I (we) could have just gone out after high school and start issuing audit reports. I guess I could have been making six figures 10 years ago if I had just known you earlier.

But if you really do have so much to share with the rest of us idiots, give me your contact information so I can forward to the state society, I am sure they would love to have you come in and provide all of us CPAs insight as to what we are all doing right and wrong.

For instance, for some reason some of us are under the impression that there were more than 93 SASs issued. Which by the way are embodied in GAAS, which makes GAAS more than 10 standards, but you obvisouly don't understand the relationship. When I left audit I was just implementing SAS 99 related to fraud consideration. Maybe you mean that there are 93 active? What I do know is that the SASs are now in the hundreds. I don't know exactly how many were actually issued because I am not looking in my accounting books while writing this. I don't need to, I pay staff to look shit up for me because I don't need to be some geek that thinks he knows it all.

Just curious, why are you so bitter? Couldn't pass the CPA exam? Fired cause you couldn't hack it in accounting? Low self-esteem (not been laid lately, ever)?

Reply to
brecker

"brecker" wrote

Actually the State Board would be interested in an unlicensed person issuing "audit" reports.

Maybe even the State Attorney General would want to get involved.

Aren't we closing in on an election year? Surely someone wants to get their name in the press "saving" the people from someone like "Chinvat" by making sure there is a hignly public conviction.

Reply to
Paul Thomas, CPA

I just had a revelation.

I took the time to actually look up statute. There is nothing in Arizona that would prohibit someone from issuing a financial audit report so long as they did not use the term "public accountant" or "certified public accountant" and the client was not regulated by state statute to have an audit by a CPA. Unfortunately that means that governments, banks, insurance companies and a few others would have to be audited by a CPA. But wait..

Let me contribute to your career success..

Start your own company called Chinvat Auditing Services (unfortunately you can't use "public accounting", "public accountant" or "certified public accountant"). You company will provide audits of all those companies that are not required by either federal, state or other regulatory or contractual agreements to have audits performed by a CPA. I bet there are millions of businesses like that out there. Amy's lemonade stand and such that accounts for assets in bananas. You can franchise your company across the US.

You can hire all the seasonal H&R Block people to perform the audits, because since you are not calling yourself a "public accountant" you are not required to be licensed, employee certified staff or meet any professional qualifications. Your staff costs will be low and you will not have any regulatory or professional standards to follow so you can just really issue reports without any substantial work at all. But we know you are a stand up guy that knows the definition of the word "audit" and you know the 10 generally accepted auditing standards. But you may need to refresh your knowledge of SASs, wait under your interpertation SASs have nothing to do with GAAS, so skip that. Anyways, your customers will all understand that they are getting the same quality work. And, you don't have to go through peer review, which since you know it all anyways, is no big deal.

This could be huge! You have to let me know so I can buy in before you go IPO.

Reply to
brecker

If a client expenses the purchase of a forklift, a knowledgeable accountant would know this is wrong and be forced to correct the error to ethically prepare that person's returns. It would also be prudent to check the rest of the client's F/S for similar misstatements.

I never insinuated that you should go beyond the F/S or to investigate the client. But if the information is in front of you and it is wrong, then you "know" that you are filing a fraudulent tax form. And BTW, it is against the tax code to knowingly submit erroneous tax forms.

The CPAs I worked for were charging $350/hour and billing me at $150/hour, so it is possible the audits were add-ons, but I doubt it, as they didn't have seperate lines on the customer's invoices.

As a CPA though, you are clearly held to a higher standard and can't get away with not "knowing" as easy as your non-licensed counter-parts. If you don't believe this try arguing in front of judge that you didn't know.

Reply to
Chinvat

Jesus, how can you possibly be this obtuse.

The first chapter of any accounting book will tell you that the accounting profession is self-regualted for the most part, though the SEC will sometimes step in when deemed necessary. The way the accounting profession regulates itself is through the state boards of accountancy which only have the power to grant licensure and take it away.

If someone used the CPA designation without licensure, they would could get sued for deceptive business practices, false advertising and maybe be charged with fraud. An out of state CPA is free to call himself a CPA whereever he may go and whatever he may do.

What you find so complicated about this I do not know.

Reply to
Chinvat

Bitter? If anything I'm sad. I can't believe I know so much more about accounting than someone who claims to be as successful as you claim to be. If what you are saying about yourself is true, then it just proves that it's not what you know but, how much dick you are willing to suck which determines success. Between that and nepotism, I'm screwed.

Reply to
Chinvat

So, you are agreeing with me and disagreeing with Paul Thomas. A non-licensed accountant can audit a company. This is exactly what I've been saying. You also must see that out of state CPAs are not barred from this activity.

As far as the kind of audits you mentioned, those kind of audits are highly specialized and CPA licensure alone wouldn't qualify you. Which doesn't really matter, because 90% of all business don't fit into that category. This is not including government which isn't even a business.

So lets make this clear. You are clearly stating that you don't need to be a licensed CPA to perform an audit of a non-publically traded company. This is reversing your former statements and in clear disagreement with Paul Thomas. So, I won.

What do I get some sort of prize or something. I'll take the big stuffed giraffe, thank you very much.

Reply to
Chinvat

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