During the Course of an Audit, a CPA Discovers an Error

question 60

Multiple Choice

During the course of an audit, a CPA discovers an error in a prior return. According to the Statements on Standards for Tax Services, the CPA should

• A) correct the error in the current year's tax return.
• B) ask the client for permission to disclose the error to the IRS.
• C) inform the IRS of the error, regardless of whether the client grants permission.
• D) withdraw from the engagement.

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Definitions:

Draft

A preliminary version of a document or plan that is subject to review and revision before being finalized.

Ordered

A directive issued by a court or other authority mandating or forbidding some action.

Allonge

Accompanying a negotiable instrument, a piece of paper that provides room for an endorsement if no room is available on the instrument itself.

Instrument

A legal document that formalizes an agreement or right, such as a contract, will, or financial instrument.