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

question 38

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

---

Definitions:

Adjustments

Modifications made to improve or correct something.

Early Years

The initial stages of a person's life, typically focusing on the period from birth until entering formal education.

"Our" Money

A concept referring to shared financial resources in a partnership or family.

Allowance for Doubtful Accounts

A contra-asset account that represents receivables that are expected to become uncollectable, used to estimate bad debts.