- Describe the standard-setting process for auditing. How does this process differ from the standard-setting process for accounting?
The quality and standards of auditing are established by PCAOB and other related professional practices (Boland et al., 2020). The standard-setting process for verification involves PCAOB working on various standard-setting projects such as oversight activities, collection information from investor Advisory Group and consulting Standing Advisory Group (Boland et al., 2020). Such events aim at collecting sufficient information that helps to solve a given issue relating to auditing. Differences between the Standard-setting process for verification and that of account is that standard-setting for auditing is carried out by PCAOB. In contrast, that of accounting is carried out by FASB.
If the tax client does not want to report all her income, I would tell her the legal consequences of her action and refuse to audit her business based on the attached risk to my profession (Code of Ethics B section 290, 2020). Further, based on the code of conduct, it calls for transparency and accountability toward dealing with clients, and hence I would advise the client to disclose all her income.
References
Boland, C. M., Brown, V. L., & Dickins, D. (2020). Standard-setting in auditing: Insights from PCAOB inspections. Journal of Accounting and Public Policy, 39(4), 106756.
Icaew.com. 2020. Code Of Ethics B Section 290. [online] Available at: <https://www.icaew.com/regulation/ethics/code-of-ethics-b/part-b-290> [Accessed 12 August 2020].
- IRS’s requirement on Preparer tax identification number PTIN
I think the IRS’s need for tax preparers to have a preparer tax identification number will reduce crooked tax preparers (Colella, 2020). As reported by IRS, more than 80 per cent of federal individual income tax returns were prepared by tax preparers or taxpayers using tax preparation software in 2007 and 2008. However, the exact number of preparers paid is undisclosed (Colella, 2020). The preparer tax identification number will help the relevant authority follow up with people who have not paid the tax. The process of obtaining new PTIN is length, but its shorter when renewing.
Reference
Colella, F. G. (2020). DC Circuit Affirms IRS Authority to Require Practitioner Tax Id Numbers & Impose a User Fee: Montrois v. the United States. The United States.
- General auditing standard
The general principle and responsibilities refer to in the regular audit of the financial statements by an independent auditor are the product of an opinion on the honesty with which it is addressed (Auditing Standards, 2020). This also applies to the gaps between the auditor’s duties and the management’s duties, which offer the auditor fair certainty about whether the financial statements are free from material misstatement, whether due to mistake or fraud (Auditing Standards, 2020). The other standards summarize the tasks that the auditor conducts when conducting his audit work, such as defining criteria for the management of the audit engagement, including the management of the engagement team members, and how he will interact with the audit committee of the organization.
Reference
Pcaobus.org. 2020. Auditing Standards. [online] Available at: http://pcaobus.org/Standards/Auditing/Pages/default.aspx