Ethics/responsibility Flashcards
Which of the following services may a CPA charge a contingent fee and still be in compliance with Circular 230?
A claim for refund filed in connection with a determination of statutory interest or penalties. AND
Representing the client in judicial proceedings.
According to SSTS6 - What discovered errors must a CPA report to the client?
MATERIAL errors
Is a CPA required to verify documents given to them by new clients?
No, unless there are red flags
What are reasonable grounds for a CPA to omit answers on the client’s tax return?
According to SSTS No. 2, only if both (a) the information is not readily available, and (b) the answer is not significant in terms of taxable income or loss, is omission of an answer permitted.
Is a CPA required to disclose the use of estimates?
no
Which of the following will not get CPA Sandy in trouble with the IRS?
A. Failing to furnish copies of returns to her clients.
B. Failing to sign returns she prepares and files.
C. Failure to furnish her preparer’s identifying number to her clients.
D. Failure to keep copies of the returns she prepares.
C. Preparer ID must be shared with IRS, not client
Tax return preparers can be subject to penalties under the Internal Revenue Code for failure to do any of the following except
A. Sign a tax return as a preparer.
B. Disclose a conflict of interest.
C. Provide a client with a copy of the tax return.
D. Keep a record of Returns prepared.
B - The I.R.C. contains no penalty for failing to disclose a conflict of interest when preparing a tax return.
Which governing accounting body deals with ethical complaints with national implications?
AICPA
In terms of liability - A CPA who fraudulently performs an audit of a corporation’s financial statements will
Probably be liable to any person who suffered a loss as a result of the fraud.
Under the position taken by a majority of the courts, to which third parties will an accountant who negligently prepares a client’s financial report be liable?
Any foreseen or known third party who relied on the report.
What, if present, would support a finding of constructive fraud on the part of a CPA?
Gross negligence in applying generally accepted auditing standards.
