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Short Summary of AICPA Statements on Standards for Tax Servi

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Need a summary of the AICPA Statements on Standards for Tax Service. No specific format-just a summary of the main points.

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This publication sets forth ethical tax practice standards for members of the AICPA - Statements on Standards for Tax Services. The following areas are covered in this document:

1. Tax Return Positions
? Should have a goodfaith belief that the position has a realistic possibility of being sustained administratively or judicially on its merits.
? When relevant, advise the taxpayer regarding potential penalty consequences of such tax return position and the opportunity to avoid such penalties through disclosure.
? Should not recommend a tax return position or prepare or a position could exploits the audit selection process of a taxing authority.
? If a member concludes that a tax return position does not meet the realistic possibility standard, a member may still recommend the position to the taxpayer if the position is not frivolous (one that is knowingly advanced in bad faith and is patently improper)
? One illustration: A taxpayer has engaged in a transaction that is adversely affected by a new statutory provision. Prior law supports a position favorable to the taxpayer. The taxpayer believes, and the member concurs, that the new statute is inequitable as applied to the taxpayer's situation. The statute is constitutional, clearly drafted, and unambiguous. The legislative history discussing the new statute contains general comments ...

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Practice Auditing Questions

1. Statement on Quality Control Standards No. 2 identifies certain quality control elements that should be considered when performing which types of services?
a. auditing, accounting, and review services
b. auditing, tax, and review services
c. accounting, tax, and review services
d. auditing, accounting, and tax services
e. auditing, tax, and consulting services

2. An auditor would be most likely to issue a "summary of findings" in connection with which one of the following types of services?
a. a financial statement audit
b. consulting services
c. an operational audit
d. a review
e. accounting services

3. Which one of the following services is often performed on public companies' interim financial statements and nonpublic companies' annual financial statements?
a. examination
b. accounting
c. auditing
d. review
e. Consulting

4. The statement that the reviewer "is not aware of any material modifications that should be made to the statements in order for them to be in conformity with GAAP" is known as:
a. reasonable assurance.
b. negligent performance.
c. negative assurance.
d. necessary ignorance.
e. positive assurance.

5. Compilation is an example of which one of the following types of services?
a. auditing
b. review
c. consulting
d. examination
e. Accounting

6. Which one of the following is not among the conditions that give rise to a demand by external users for independent audits of financial statements?
a. remoteness of users
b. complexity of subject matter
c. the securities acts, administered by the SEC
d. potential conflict of interest between users and preparers of the statements
e. consequence for making decisions

7. What level of assurance does the reader of a private company financial statement receive on the company's system of internal controls?
a. positive assurance
b. reasonable assurance
c. negative assurance
d. no assurance
e. limited assurance

8. How many different opinions must an auditor of a publicly held company issue?
a. 1
b. 2
c. 3
d. 4
e. 5

9. There are several paragraphs included in the auditor's standard report in internal control over financial reporting. Which paragraph defines internal control over financial reporting?
a. introductory paragraph
b. scope paragraph
c. inherent limitations paragraph
d. definition paragraph
e. explanatory paragraph

10. Statements on auditing standards (SAS's) are interpretations of?
a. generally accepted auditing standards
b. generally accepted accounting principles
c. generally accepted accounting policies
d. generally accepted auditing services
e. AICPA code of professional conduct

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