Mod 23 Professional And Legal Responsibilities Handout + Highlighted Text Flashcards Preview

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Flashcards in Mod 23 Professional And Legal Responsibilities Handout + Highlighted Text Deck (232):
0

5 kinds of liability to clients:

Accountants are liable for...

1 contract breaches
2 negligence
3 fraud
4 disclosing confidential client info without client permission
5 confidentiality of client in working papers accountant retains

1

4 elements of negligence

1 duty of care
2 breach
3 damages
4 casuality

2

Element of negligence:

Duty of care

The accountant owed a duty of care to party harmed

3

Element of negligence:

Breach

Accountant breached by failing to use due care

4

Accountant breached by failing to use due care, 2 instances (including what usually means)

1 failed to act like a reasonably prudent accountant

2 usually means failed to follow GAAS or GAAP unless following
GAAS or GAAP would make the report misleading

5

Element of negligence:

Damages

Some type of harm was suffered

6

Element of negligence:

Casuality

Damages were caused by the accountant's breach

7

Liable for Fraud includes either...

Actual or constructive

8

Actual fraud must know five elements under what neumonic?

MS RID

9

What does Actual Fraud MS RID stand for?

Material misrepresentation
Scienter
Reasonable Reliance
Intent to rely
Damages

10

Actual fraud:

Must have M...

Material misrepresentation of fact

11

Actual fraud:

Must have S...

Scienter

12

Scienter

Intent to deceive (misrepresentation was made intentionally or
Knowingly)

13

Actual fraud:

Must have R...

Reasonable reliance

14

Actual fraud:

Must have I...

Intent to rely

15

Actual fraud:

Must have D...

Damages

16

Damages

Liable to anyone suffering a loss

17

Constructive fraud is also known as...

Gross negligence

18

Constructive Fraud AKA Gross Negligence has...2

1 All 5 elements of actual fraud

2 but Scienter is taken care of by reckless disregard for truth

19

What is the neumonic for constructive fraud AKA gross negligence?

MR RID

20

Constructive fraud AKA Gross negligence:

What does MR RID stand for?

Material misrepresentation
Reckless disregard for the truth
Reasonable reliance
Intent to rely
Damages

21

Reckless disregard for the truth

Making a statement without knowing if it is true or false

22

Confidential client information can't be revealed to others without...

Client's OK

23

Cannot reveal confidential information to...

Purchaser of CPA's practice

24

Confidential client information:

If subpoenaed in a court case, accountant must...

Testify unless in a state that recognizes the accountant client
Privilege

25

Confidential Client info:

It must be revealed to...

A state CPA society quality control review panel

26

Who do working papers belong to? Who do they not belong to?

Belong to accountant, not the client

27

In working papers that belong to accountant...

Same rules of confidentiality apply

28

Accountant's aren't usually liable for negligence to...

3rd parties

29

Accountants aren't usually liable for negligence to 3rd parties because...

There is no privity

30

Privity

No direct or contractual relationship between the accountant and
the 3rd party

31

3 rules that hold accountant's liable to third parties at common law

1 Third Party Beneficiary Rule or Intended Users

2 Ultramares Rule (minority view)

3 foreseen users and any foreseen class of users (majority view)

32

Liabilities to Third Parties at Common Law:

Third Party Beneficiary Rule of Intended Users

Accountants are liable for negligence if they had no reason to know third party would rely on their work

33

Liabilities to Third Parties at Common Law:

Ultramares rule (minority view)2

1 if they were in privity with them or

2 they knew specific name of 3rd party that would rely on their
Work

34

Liabilities to Third Parties at Common Law:

Most states have expanded Ultramares to...

Make accountants liable for negligence to foreseen users and any foreseen class of users (Majority view)

35

Liabilities to Third Parties at Common Law:

Most states have expanded Ultramares to make accountants liable for negligence to foreseen users and any foreseen class of users. (majority view). Under this rule...2

1 accountants are liable for negligence to 3rd parties that are
members of a group accountant knew would rely on their work

2 thus it's not necessary to know specific name of 3rd party, just
That they are member of group that would rely on accountant's work

36

Privity is the only defense for what?

2) what is it not a defense for?

Privity is Only a defense to negligence actions by 3rd parties

2) no defense to fraud, '33, '34

37

Securities a to of 1933 requires...2

1 A registration statement filed with the SEC

2 containing audited financial statements prepared by accountants
For public sales of securities in interstate commerce

38

Civil Liability

Suits for money damages under section 11 of '33

39

Civil Liability- suits for money damages under Section 11 of '33 must show...3

1 acquired stock, need not be initial purchaser

2 suffered loss

3 material misrepresentation or omission of fact in the FS

40

No Scienter or reckless disregard for truth or reliance...

Need be proven by purchaser in securities act of 1933

41

Liability under Securities Act of 1933:

Accountant is liable unless he can prove...

It was not his fault (due diligence defense)

42

Liability under Securities Act of 1933:

Plaintiff must sue within...2

1 one year of discovery of misrepresentation and

2 within 3 years of the offering date

43

Liability under Securities Act of 1933:

Criminal liability if accountant...

Willfully made misrepresentation

44

Liability under Securities Exchange Act of 1934 generally covers...2

1 stock sold on national stock exchanges in interstate commerce
And

2 requires reports and financial statements prepared by public accountants

45

Liability under Securities Exchange Act of 1934:

Civil Liability for money damages under section 10 b & Rule 10 b-5 must show...5

1 Purchaser of stock
2 suffered a loss
3 material misrepresentation or omission of fact in CPA's report
4 must show Scienter
5 must show reliance

46

Liability under Securities Exchange Act of 1934:

Must also show Scienter (or reckless disregard for the truth) an intent...2

1 Intent to deceive or bad faith is not enough

2 negligence is not enough

47

A member of the AICPA may be expelled or suspended without hearing for any of the following:

Member's CPA certificate or license or permit to practice is...

Revoked by state as disciplinary measure

48

A member of the AICPA may be expelled or suspended without hearing for any of the following:

Member is convicted of...

A crime punishable by imprisonment for more than one year

49

A member of the AICPA may be expelled or suspended without hearing for any of the following:

The member files or aids in filing...

A fraudulent tax return for client or self

50

A member of the AICPA may be expelled or suspended without hearing for any of the following:

Member intentionally...

Fails to file his tax return

51

AICPA Professional Ethics Division may investigate ethics violations an may...

Sanction those that are less serious using less serious remedies

52

Court decisions have constantly held that even if an individual is not a member of the AICPA, that individual is...

Still expected to follow profession's Code of Professional Conduct

53

SECs actions against accountants:

After a hearing, the SEC can...

2) why?

Revoke or suspend a CPA from practicing before the SEC

2) if CPA willfully violated federal securities laws or regulations or
Has acted unethically or unprofessionally

54

If a caps is suspended from practicing before the SEC, he cannot serve as...

Auditor for public company

55

The SEC can revoke or suspend an accountant from practicing before the SEC upon...

Conviction of felony or misdemeanor in which moral turpitude was involved

56

PCAOB investigates and sanctions...

Registered firms for violations of standards of performance

57

Registered CPA firms must have...

Inspections by PCAOB staff

58

Firms with more than 100 publicly traded clients must...

Be inspected each year

59

Firms with 100 or less publicly traded clients must...

Be inspected every 3 years

60

More recently, many courts have expanded liability to...

Other third parties

61

Foreseen party 2

1 Third party who accountant knew would rely on FS

2 or member of limited class that accountant knew would rely on
FS for specified transaction

62

Majority rule

Accountant is liable to foreseen third parties for ordinary negligence

63

The rationale for not allowing liability to more third parties is...

That accountants should not be exposed to liability in indeterminate amount to indeterminate class

64

The accountant is liable for fraud, constructive fraud or gross negligence to...

All parties whether foreseen or not

65

Foreseeable party

Any party that accountant could reasonably foresee would receive financial statements and use them

66

Majority rule is that accountant is not liable to...

Foreseeable parties for negligence

67

The CPA firm is responsible for reviewing for material events that occur up until...

The effective date of the registration statement

68

S-1 review

Made for review of events subsequent to balance sheet date up
Until making registration statement under securities regulation

69

5 Defenses available to auditors for the 1934 act

1 audit was performed with due care
2 misstatement was immaterial
3 plaintiff had prior knowledge of misstatement
4 plaintiff did not rely on information
5 misstatement was not cause of loss

70

4 defenses available to auditors for the 1933 Act

1 audit was performed with due care
2 misstatement was immaterial
3 plaintiff had prior knowledge of misstatement
4 misstatement was not cause of loss

71

What defense can be used by auditor's in the 1934 act but not the 1933 act?

Plaintiff did not rely on the information

72

Professional liability insurance typically is used to cover such losses:

The duty to perform an audit is not delegable unless...

Client agrees to delegation

73

The duty to perform an audit is not delegable because it is...

It is a contract for personal services unless client agrees to
delegation

74

What insurance covers an accountant's negligence

Accountants' professional liability (malpractice) insurance covers
Their negligence

75

A fidelity bond...

Protects client from accountant's fraud

76

CPA is generally not liable for the effects of events occurring...

2) liability extends to...

Subsequent to date of auditor's report

2) effective date of registration for reports filed with SEC

77

Auditors who audit financial statements under the Federal Securities Exchange Act of 1934 are required to establish procedures to...3

1 detect material illegal acts

2 identify related party transactions and

3 evaluate ability of firm to continue as going concern

78

If auditor detects possible illegal activity, he or she must...

Inform audit committee or board of directors

79

Under the Private Securities Litigation Reform Act, If senior management or board fails to take remedial action and if illegal activities are material so that departure from standard audit report or auditor registration is indicated, the auditor shall...

Report this to the board of directors

80

Under the Private Securities Litigation Reform Act, If senior management or board fails to take remedial action and if illegal activities are material so that departure from standard audit report or auditor registration is indicated, the auditor shall report this to the board of directors. The board has how long to notify the SEC?

One day

81

If board does not notify the SEC in one day, the auditor must...

Furnish SEC with copy of auditor's report to board and/or resign
from audit

82

Civil liability may be imposed by SEC for...

Auditor's failures under the Private Securities Litigation Reform Act

83

Auditor's are protected from...

Civil suits for these reports to SEC under the Private Securities Litigation Act

84

The Private Securities Litigation Reform Act amends...

1933 act and 1934 act

85

Private Securities Litigation Act was passed to...

Reduce lawsuits against accounting firms and issuer's of securities

86

The SEC's enforcement of securities laws is not affected by the Private Securities Litigation Reform Act because...

Law governs private litigation

87

Private Securities Litigation Act:

Discourages class action lawsuits for...

Frivolous purposes

88

Private Securities Litigation Act:

Discourages frivolous suits by...2

1 Providing stringent pleading requirements for many private actions under 1934 Act

2 Awards costs and attorneys' fees against parties failing to fulfill
These pleading requirements

89

Private Securities Litigation Act:

Changes rules on joint and several liability so that...

Liability of defendants is generally proportionate to their degree
Of fault

90

Private Securities Litigation Act: example

Plaintiffs suffered $2 million in damages from securities fraud of a company. The auditors of the company are found to be 15% at fault. If the auditors did not act knowingly... Or acted knowingly?

Not act knowingly, they owe 15%

Acted knowingly, they owe the full amount

91

The is another name for SOX

Public Company Accounting Reform and Investor Protection Act

92

SOX:

New federal crimes involving willful...

Willful nonretention of audit and review workpapers

93

SOX:

Retention of work papers is required for...

5 years, in some cases 7 years

94

SOX:

Makes illegal the destruction or...

Falsifying of records to impede investigations

95

SOX:

Provides for fines or imprisonment up to...

20 years or both

96

SOX:

Applies to an accountant who...

Audits a public company

97

SOX:

Aside from accountants, working paper crimes apply to...

Attorneys, consultants and company employees

98

SOX:

Requires SEC to issue new rules and then...

Periodically update its rules on details of retaining workpapers
And other relevant records connected with audits or reviews

99

SOX created the...

PCAOB

100

PCAOB is a...

2) not a...

Nonprofit organization

2) not a federal agency

101

Violation of rules of the PCAOB are treated as...

Violation of 1934 Act with its penalties

102

PCAOB, consists of how many members?

5

103

3 requirements of five members of PCAOB

1 two members must be or have been CPAs

2 three members cannot be or cannot have been CPAs

3 none of Board members may receive pay or profits from CPA firms

104

Main functions of PCAOB board are to...2

1 register and conduct inspections of public accounting firms

2 set standards on auditing, quality control, independence or preparation of audit reports

105

SOX Register and conduct inspections of public accounting firms:

This replaces...

Peer reviews for part of CPA firm's practice that involves audits
Of issuers

106

SOX Register and conduct inspections of public accounting firms:

CPA firms that audit more than 100 issuers are inspected...

Annually

107

SOX Register and conduct inspections of public accounting firms:

CPA firms that audit from 1 to 100 issuer's are inspected...

Every three years

108

SOX Register and conduct inspections of public accounting firms:

Special inspections may be performed...

In addition to regular inspections

109

SOX, Set standards on auditing, quality control, independence or preparation of audit reports:

May adopt standards of...

Existing professional groups or new groups

110

SOX, Set standards on auditing, quality control, independence or preparation of audit reports:

Accounting firm must have...

Second partner review and approve each audit report

111

SOX, Set standards on auditing, quality control, independence or preparation of audit reports:

Accounting firm must report on...

Examination of internal control along with description of material weaknesses

112

SOX:

A company must disclose whether it has adopted a code of ethics for company's...4

1 principal executive officer
2 principal accounting officer
3 principal financial officer or
4 controller

113

SOX:

A company may have separate codes of ethics for different officers or may have...

Broad code of ethics covering all officers and directors

114

SOX:

A company is not required to adopt a code of ethics, but if it has not it must...

Disclose the reasons why

115

Company officials found liable for fraud cannot use...

Bankruptcy law to discharge that liability

116

Attorneys practicing before SEC representing issuer's must report evidence of...

Material violations by company or its officers, directors or agents
Of securities laws or breach of fiduciary duties

117

Report of violation of securities laws or breach of fiduciary duties must be made to...

Chief legal officer or chief executive officer

118

Report of violation of securities laws or breach of fiduciary duties must be made to the chief legal officer or chief executive officer. If management does not respond appropriately, then the attorney must...

Report the evidence up the latter to those charged with governance

119

SOX:

The SEC adopted new rules requiring more events to be reported on Form 8-K and shortening file deadlines to...

4 business days after the date event occurs

120

SOX:

The company must disclose several items if the director has...

Resigned or refused to stand for reelection

121

SOX:

The company must disclose several items if a director has resigned or refused to stand from reelection because of...3

1 disagreement with company's practices

2 operations or policies or

3 if director has been removed for cause

122

SOX:

If a new executive is appointed, the company must disclose information such as...2

1 his or her name

2 description of material terms of employment agreement between company and officer

123

SOX categories it prohibits for auditor's of public companies from doing even if approved by audit committee:

Bookkeeping or...

Other services relating to financial statements or accounting records

124

SOX categories it prohibits for auditor's of public companies from doing even if approved by audit committee:


Financial information...

Systems design and/or implementation

125

SOX categories it prohibits for auditor's of public companies from doing even if approved by audit committee:


Appraisal...

Services

126

SOX categories it prohibits for auditor's of public companies from doing even if approved by audit committee:


Internal audit...

Outsourcing services

127

SOX categories it prohibits for auditor's of public companies from doing even if approved by audit committee:


Management...

Functions

128

SOX categories it prohibits for auditor's of public companies from doing even if approved by audit committee:


Actuarial...

Services

129

SOX categories it prohibits for auditor's of public companies from doing even if approved by audit committee:

Investment or...

Broker dealer services

130

SOX categories it prohibits for auditor's of public companies from doing even if approved by audit committee:

Certain tax services such as...

Tax planning for potentially abusive tax shelters

131

SOX categories it prohibits for auditor's of public companies from doing even if approved by audit committee:

Board permitted to exempt on...

Cases by case basis services of audit firm for audit client

132

Tax services, performed for public company auditors, must be approved by...

Audit committee

133

SOX prohibits the audit partner having...

2) and audit partner who reviews the audits from...

Primary responsibility for issuer's audits

2) serving more than 5 consecutive years (must be rotated)

134

CAO

Chief Administrative Officer

135

If public company has hired an employee of an audit firm to be its CEO, CFO or CAO within...

Previous year, audit firm may not audit public company

136

SOX requires increased disclosure of...

Off balance sheet transactions

137

SOX mandates that pro forma financial disclosures be...

Reconciled with figures done under GAAP

138

SOX creates new federal laws against...

Tampering and destruction of audit work papers

139

SOX increases protection of...

Whistle blowers from retaliation because of participation in
proceedings against firms in securities fraud

140

SOX provides that employees may report securities fraud...2

Directly to audit committee,

providing info anonymously and confidentially

141

SOX:

Public Companies may not make or modify personal loans to...

Officers or directors with few exceptions

142

SOX:

Annual reports filed with the SEC need to contain financial statements that incorporate...

All material corrections noted by CPA firms

143

SOX:

The SEC is authorized to discipline professionals...

Practicing before the SEC

144

SOX:

Auditor's must retain work papers for...

5 years

145

SOX directed SEC to perform studies to...

Promulgate new regulations in the future

146

SOX, SEC regulations that are now the force of law:

Require disclosure of difference between...

Pro forma financial results and GAAP

147

SOX, SEC regulations that are now the force of law:

Require that critical accounting policies be reported...

From auditors to audit committee

148

SOX, SEC regulations that are now the force of law:

Companies are required to disclose whether...

They have adopted a code of ethics

149

SOX, SEC regulations that are now the force of law:

Disclosure of names of...

Financial experts who serve on company's audit committee

150

SOX, SEC regulations that are now the force of law:

Actions are prohibited that...

Fraudulently manipulate or mislead auditors

151

SOX:

CEOs and CFOs of most large companies listed on public stock exchange are now required to...

Certify financial statements filed with the SEC

152

SOX, CEO and CFO certifying financial statements involves:

Financial statements are...

Fairly stated in all material respects

153

SOX, CEO and CFO certifying financial statements involves:

Signing officer reviewed...

The report

154

SOX, CEO and CFO certifying financial statements involves:

The company's report does not...

Omit or misstate any material facts to the best of their knowledge

155

SOX, CEO and CFO certifying financial statements involves:

The company has an...

Internal control system in place to allow honest certification of
financial statements

156

SOX, Additional Liability Against Accountants:

Auditors are required to use...

2) Civil liability is...

Adequate procedures to uncover illegal activity of client

2) proportional to the degree of responsibility

157

Civil liability is proportional to degree of responsibility2

1 One type of responsibility is rough the auditors own carelessness

2 another is assisting in improper activities they are aware of

158

Preparer, is an Individual who prepares for compensation or who employs one or more persons to prepare for compensation any...4

1 Federal tax return
2 exempt organizations
3 gift
4 estate tax returns

159

Federal tax returns include a substantial portion of...3

Income, employment, excise

160

Preparer of taxes must receive...

Compensated and can be implied or explicit

161

Implied compensation example

Accountant who prepares, individual return for company president
And performs the audit, doing the taxes for no additional fee

162

Performance of the following act will not classify the person as a preparer:

Preparation of a return for...

A friend, neighbor or relative free of charge, even though person receiving return receives a gift of gratitude from the taxpayer

163

Performance of the following act will not classify the person as a preparer:

Furnishing of...3

1 typing,
2 reproducing or
3 other mechanical assistance in preparing a return

164

Performance of the following act will not classify the person as a preparer:

Preparation by an employee of a return for his or her employer, or an officer of the employer or for another employee if...

He or she is regularly employed by that employer

165

Preparation of tax return includes giving advice on events that have occurred at the time the advice is given if the advice is directly relevant to determining on the tax return the...3

1 existence
2 character
3 or amount of schedule

166

The CPA should no prepare or sign a tax return, if the CPA knows...

The return takes a position the CPA could not recommend

167

The CPA should make a reasonable effort to obtain form the client and provide appropriate answers to all questions on a tax return before...

Signing as a preparer

168

CPA in good faith may rely without...

Verification on information furnished by client or third party
(No review or audit needs to be performed)

169

The CPA should not ignore implications of info furnished and should make...

Reasonable inquiries if the information appears incorrect

170

When feasible the CPA should refer to...

The client's past returns

171

When preparing a tax return, a CPA should consider information known from the tax return of another client if that information is...2

1 relevant to return being prepared

2 not confidential

172

Use of estimates on tax returns...

1 may be made where data is missing

2 can use estimates when impracticable to obtain exact information

173

A CPA should inform a client promptly upon...2

1 becoming aware of material error in previously filed return or

2 upon becoming aware of client's failure to file required return

174

When CPA has become aware of material error in previously filed return or aware of client's failure to file a required return, the CPA should...

2) the CPA is not...

Recommend measures to be taken

2) not obligated to inform IRS of error without client's permission, except where required by law

175

If the CPA is requested to prepare the client's current return and the client has not taken appropriate action to correct an error in a prior year's return, the CPA should...

Consider whether to keep professional relationship with client or withdraw

176

Knowledge of error, Administrative Proceedings:

When a CPA is representing a client in an IRS proceeding (examination, appellate conference) with respect to the return that contains an error, which the CPA has become aware, the CPA should...

1 inform client promptly and recommend measures to be taken

177

Knowledge of error, Administrative Proceedings:

CPA should request client's permission to disclose the error to the IRS and lacking such permissions should...

Consider whether to withdraw from representing the client

178

Form and content of advice to clients for tax preparer

No standard format required, but written preferred

179

Treasury Department Circular 230:

Practice before the IRS comprehends all matters connected with a presentation to the IRS including (but not limited to) 4

1 preparing and filing documents
2 communication with IRS
3 rendering written advice w/respect to entity
4 representing client at conferences, hearings and meetings

180

Treasury Department Circular 230:

Rendering advice with respect to entity includes...2

1 transactions
2 plan or arrangement

181

Treasury Department Circular 230:

Practice before the IRS is primarily with...3

1 CPAs
2 attorneys
3 enrolled agents

182

Treasury Department Circular 230:

Practice before the IRS for limited purposes includes...3

1 enrolled actuaries
2 enrolled retirement plan agents
3 registered tax return preparers

183

EAs

Enrolled agents

184

RTRP

Registered tax return preparers

185

Treasury Department Circular 230:

Enrollment as an EA, retirement plan agent or RTRP is granted if the individual is...2

1 At least 18 years old and

2 demonstrates competence in tax matters by passing an
examination

186

Treasury Department Circular 230:

Former IRS employees may be granted the right to practices as an enrolled agent by virtue of...

Service and experience

187

Treasury Department Circular 230:

Practice as a registered tax return preparer (RTRP) is limited to...

Preparing and signing tax returns and claims for refund

And other documents for submission to IRS

188

Treasury Department Circular 230:

A RTRP may represent taxpayers before...

1 revenue agents
2 customer service representatives
3 or similar employees of IRS

189

Treasury Department Circular 230:

A RTRP may represent taxpayers before revenue agents, customer service representatives or similar employees of the IRS during an examination if the RTRP...

Signed the tax return or claim for refund for the taxable year under examination

190

Treasury Department Circular 230:

A RTRP's right to practice does not permit such individual to represent the tax payer before...3

1 appeals officers
2 revenue officers or
3 counsel

191

Treasury Department Circular 230:

RTRP is not authorized to provide...

Tax advice to client

192

Treasury Department Circular 230:

RTRP is not authorized to provide tax advice to the client except as necessary to...3

1 prepare tax return
2 claim refund or
3 other documents submitted to IRS

193

Treasury Department Circular 230:

All paid tax return preparers (including CPAs, attorneys and EAs) must...3

1 register with IRS
2 pay an annual fee
3 obtain a preparer tax identification number

194

PTIN

Preparer Tax Identification Number

195

All paid tax return preparers must register with the IRS, pay an annual fee and obtain a Preparer Tax Identification Number (PTIN) before...

Signing tax payers returns or claims for refund

196

Treasury Department Circular 230:

The IRS Office of Professional Responsibility will oversee...4

1 PTIN registration
2 enrollment
3 renewal processes
4 oversee future testing and continuing education requirements

197

Treasury Department Circular 230:

Individuals may appear on their own behalf...

Before the IRS

198

Treasury Department Circular 230:

An individual who is not a practitioner may represent a taxpayer...

Before the IRS in limited situations

199

Treasury Department Circular 230 individuals who are not practitioners who may represent taxpayer for the IRS in limited situations:

Group includes members of tax payer's...

Immediate family

200

Treasury Department Circular 230 individuals who are not practitioners who may represent taxpayer for the IRS in limited situations:

Full time employees may...

Represent their employers

201

Treasury Department Circular 230 individuals who are not practitioners who may represent taxpayer for the IRS in limited situations:

An officer or full time employee may...

Represent a corporation

202

Treasury Department Circular 230 individuals who are not practitioners who may represent taxpayer for the IRS in limited situations:

A general partner or full time employee of a partnership may...

Represent the partnership

203

Treasury Department Circular 230 individuals who are not practitioners who may represent taxpayer for the IRS in limited situations:

Trusts, receiverships, guardianships or estates may be represented by their...4

1 trustees
2 receivers
3 guardians or
4 executors

204

Duties and restrictions relating to practice before the IRS:

Practitioner must promptly submit records or information in any matter before the IRS unless the practitioner...

Believes in good faith and on reasonable grounds that records and information are privileged

205

Duties and restrictions relating to practice before the IRS:

Practitioner must, at the request of the client...

Promptly return the client's records

206

The client's records include all...

All documents and electronic media provided to the practitioner

207

Duties and restrictions relating to practice before the IRS:

The dispute over fees generally does not allow...

The practitioner to retain records

208

Duties and restrictions relating to practice before the IRS:

A practitioner who becomes aware that a client has not complied with the revenue laws of has made an error in or omission from any return must advise the client promptly of the...2

1 fact of noncompliance

2 consequences for such non compliance

209

Duties and restrictions relating to practice before the IRS:

The practitioner must exercise due diligence in preparing returns and documents relating to IRS matters, as well as determining the correctness or written or oral representations made to...

Clients and Department of Treasury

210

Duties and restrictions relating to practice before the IRS:

A practices may rely on the work product of another person if the practitioner used reasonable care in...4

1 engaging
2 supervising
3 training and
4 evaluating the person

211

Duties and restrictions relating to practice before the IRS:

A practitioner may not charge a...2

1 unconscionable fee and
2 generally may not charge a contingent fee for preparing original
return

212

Duties and restrictions relating to practice before the IRS:

A contingent fee may be charged in connection with...3

1 IRS examination of original return or amended return

2 or claim for refund

3 or judicial proceedings arising under the code

213

Duties and restrictions relating to practice before the IRS:

The practitioner may publish the availability of written fee schedule including...4

1 fixed fees for routine services
2 hourly rates
3 ranges of fees for specific services
4 fee charged for initial consultation

214

Duties and restrictions relating to practice before the IRS:

The practitioner may charge no more than the published fees for at least...

30 days after the last date the fee schedule was published

215

Duties and restrictions relating to practice before the IRS:

A practitioner may not use any form of public communication or private solicitation containing a...

False, fraudulent or coercive statement or claim

216

Duties and restrictions relating to practice before the IRS:

Enrolled agents may not utilize the word...

2) or imply an...

"Certified"

2) employee/employer relationship with the IRS

217

Duties and restrictions relating to practice before the IRS:

Tax advisors should provide client's with the highest quality representation concerning Federal Tax issues by adhering to...

Best practices in providing advice in preparing or assisting in preparation of submission to IRS

218

Duties and restrictions relating to practice before the IRS:

A practitioner who prepares returns may not...2

Endorse

nor negotiate any federal tax refund check issued to client
By the government

219

A practitioner may not advise a client to take a position on a...3

1 document
2 affidavit or
3 other paper that is frivolous

220

Duties and restrictions relating to practice before the IRS:

Practitioner may not advise client to delay submission of documents impeding...

Impeding the administration of federal laws

221

A frivolous position is one...2

1 Without basis in fact or law

2 Or espouses position courts have held frivolous

222

A practitioner must inform a client of any penalties that are likely to apply to a position taken on a return and must inform client of...2

1 Any opportunity to avoid penalties by disclosure

2 and requirements of adequate disclosure

223

Practitioners providing written advice must adhere to specific standards. Written advice is categorized as either...2

1 covered opinions or

2 all other written advice

224

More strict standards apply to covered opinions because...

Taxpayers may rely on a practitioner's covered opinion to avoid penalties

225

Additional penalties may be imposed on preparers if they fail to fulfill the following requirements (unless failure is due to reasonable cause):

Preparer must sign...

Returns done for compensation

226

Additional penalties may be imposed on preparers if they fail to fulfill the following requirements (unless failure is due to reasonable cause):

Prepare must provide a copy of the return or refund claim to...

The tax payer no later than when preparer presents copy of return to taxpayer for signing

227

Additional penalties may be imposed on preparers if they fail to fulfill the following requirements (unless failure is due to reasonable cause):

Returns and claims for refund must contain the...2

1 social security number of preparer and

2 identification number of preparer's employer or partnership

228

Additional penalties may be imposed on preparers if they fail to fulfill the following requirements (unless failure is due to reasonable cause):

Preparer must either keep a list of those for who returns where filed with specified information or copies of actual returns for...

3 years

229

Additional penalties may be imposed on preparers if they fail to fulfill the following requirements (unless failure is due to reasonable cause):

Employers of return preparers must...2

1 listing of return prepares

2 and place of employment for 3 years

230

Additional penalties may be imposed on preparers if they fail to fulfill the following requirements (unless failure is due to reasonable cause):

Prepare must not...

Endorsed or negotiate a refund check issued to a taxpayer

231

Additional penalties may be imposed on preparers if they fail to fulfill the following requirements (unless failure is due to reasonable cause):

Preparer must not disclose information furnished in connection with The preparation of the tax return unless...2

1 for quality or peer review

2'under an administrative order by a regulatory agency

Decks in Yaeger REG Class (77):