When a member of the AICPA prepares a taxpayer's federal income tax return, the member has...

When a member of the AICPA prepares a taxpayer's federal income tax return, the member has the responsibility to

A. be an advocate for the entity's position

B. Verify the data to be used in preparing the return.

C. Take a position of independent neutrality

D. Argue the position of the Internal Revenue Service

The correct answer is A

THIS QUESTION ILLUSTRATES THAT THE ROLE OF A TAX ACCOUNTANT IS VERY DIFFERENT

THAN THAT OF AN INDEPENDENT AUDITOR. DISCUSS HOW THE TWO DIFFERENT IN THE FOUR DIMENSIONS OF THE FOUR ANSWERS.

Solutions

Expert Solution

Tax auditor conducts his audit and procedures which are relevent as per Tax Laws of country only when Revenue crosses threshhold limits and excluding composite/small dealers. While on the other hand statutory auditor conducts the audit and provides an opinion on true and fair view of financial statements by using Accounting standards issued by IFRS / US GAAP and auditing standards issued by IAS.
Tax auditor’s scope is restricted to Tax laws of the respective country ie IRS CODE and he does audit of only tax related matters like Allowance or Disallowance of any expenditure etc. wheres as statutory auditor’s scope is much greater than the tax auditor as it includes all financial data as well as all procedural laws like Provident Fund, Gratuity, TDS etc.
Tax auditor report provides an detailed insight about correct taxable income for calculation of tax or loss for carrying forward and set off in future years with respect to applible tax laws in the country. Whereas statutory auditor reports have various purpose as it provides an opinion of financial statements that whether they give true and fair picture and are prepared in accordance with the applicable standards l. Statutory auditor reports also includes comments on Internal Financial controls and other legal requirements eg Corporate social responsiblity requirements.
Tax auditor submits his report to IRS DEPT as they are the regulating authority while statutory auditor submits his report to Shareholder of the company.

ekkarill92 answered 9 months ago

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