CPA Report ACC/545 Financial Reporting
CPA Report ACC/545 Financial Reporting PRG211
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This 0 page Study Guide was uploaded by Topseller Notetaker on Wednesday November 11, 2015. The Study Guide belongs to PRG211 at Ashford University taught by in Fall 2015. Since its upload, it has received 30 views. For similar materials see in Computer Programming at Ashford University.
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Date Created: 11/11/15
Running head CPA REPORT CPA Report ACC545 Financial Reporting Monday May 19 2014 CPA REPORT 2 CPA Report Internal Memo To Katherine Coach CPA Manager From Sharon Ward CPA RE CPA Report It is extremely important to understand the responsibilities of a CPA before any information is sent to clients or other outside parties This firm has been asked to compile a report to explain how the following can be completed how the company should be calculating deferred taxes the proper reporting methods the company should be using to report accounting changes and errors and Why the company should establish a subsidiary as a corporation The Professional Responsibility of a CPA As a Certified Public Accountant is it my responsibility to carry out audits accounting and tax serVices in an ethical and professional manner Our clients include both current and potential shareholders investors lenders and regulatory agencies such as the Federal Accounting Standards Board FASB rely on financial statements in order to make accurate and informed decisions pertaining to the clients financial situation The AICPA state boards of accountancy state societies of CPA s state statues and other regulatory agencies such as the GAO and DOL set the ethical standards also known as rules and regulations by Which I must make decisions that are honest accurate and reliable quotDelapquot 2014 I am responsible for conducting myself in a manner by Which client information is kept confidential and safe from authorized use or access Methodology Used To Determine Deferred Taxes CPA REPORT 3 The method that companies use for deferred taxes is a method called temporary difference Temporary difference is the difference on a balance sheet of the carrying amount of an asset or liability and its tax basis A temporary difference falls into one of two of the following categories 1 Deductible This is a temporary difference that will yield amount that can be deducted in the future when the company is determining taxable gains or losses 2 Taxable This temporary difference will yield taxable amounts in the future when determining taxable gains or losses The difference between the two categories occurs when the carrying amount of an asset or liability is recovered or settled quotAccounting Dictionaryquot 2014 Due to the temporary differences the expense that the company incurs in each reporting period can compromise the company39s current tax expense or income as well as the company39s deferred tax expense or income The method that accounts use for deferred taxes is accrual Deferred taxes are recognized on financial statements when taxes are recognized on the asset or liability Reporting Accounting Changes and Errors There may be times when the company may need to make accounting changes these changes can be done using one of two of the following approaches 1 The Retrospective Approach this approach will help the company between reporting period with consistency and comparability Comparative financial statements are amended to re ect any changes The accruing effect of the change is reported as a prior period of adjustment in the earliest period reported The accounting records should be adjusted to re ect these changes at the beginning of the reporting period CPA REPORT 4 2 Prospective Approach This approach is used when it is impossible for the company to use the retrospective approach An acceptable reason for using this approach would be when changing from an acceptable inventory costing method of LIFO It would be almost impossible for the company to attempt to estimate what inventory and cost of goods sold would have been in previous years if the company has been using the LIFO method Due to new requirements by the FASB under certain circumstances the company may be requires to us this method A few of those circumstances would be changes in depreciation amortization and depletion When correcting errors the company must handle them as a prior period adjustment to the earliest that was reported in the financial statements The following are some of the types of errors that your company may need to correct 1 2 Changes from an unacceptable accounting principle to an acceptable one Human error such as entering the wrong information or entering the wrong nubmer Changes to estimates that were not prepared in good faith Misuse of information Misclassification of costs as expenses and expenses are costs quotAccounting Changes And Error Correctionsquot 2014 Establishing A Subsidiary as a Corporation Should your company acquired another company that is in need of a strong company to go in and provide controls and stability in the company structure The company will still be able to keep the identity of the company the same however the company will be required to report directly to your company CPA REPORT By acquiring the new company your company will obtain more than 50 of the voting stock and in doing so your company can obtain control of its operations making the newly acquired company a subsidiary At that time your company will be considered the parent company over the newly acquired one corporation Together the two companies can form a corporation CPA REPORT References Accounting Changes and Error Corrections 2014 Retrieved from httpaccounting utepedusglandonc20c20apdf Accounting Dictionary 2014 Retrieved from httpWWWaccountingtoolscomdictionary temporarydifference Delap 2014 Retrieved from httpWWWdelapcpacomuncategorizedWhataretheethical responsibilities of thecpahtm
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