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Every year, the American Institute of Certified Public Accountants (AICPA) releases an audit report on a CPA firm. The report looks at various aspects of the firm's financial and accounting practices, from management to the client.
While some clients may feel confident in the services they receive from their CPA firm, others may have serious concerns about their accounting professional. Some of these concerns may be addressed by looking at past audit reports.
Can Rely to the Accountant
Records And Client Communication: Clients rely on their accountants for many important financial decisions. For example, an accountant is often called upon to advise clients about various tax matters including filing taxes, saving for retirement and setting up an estate plan.
In addition, accountants are also responsible for advising clients about business decisions including opening a new business or buying an existing one. A client may also ask his or her accountant to help with tax preparation or investment decisions. Finally, accountants may also be called upon to assist with other important financial decisions including credit card debt, wills and trusts.
The purpose of a CPA's records is to provide clients with accurate and timely information regarding their financial affairs. This includes the following: Financial information such as bank statements, brokerage statements, credit card statements and other similar documents.
In some cases, the client may request that an accountant prepare all of these documents for them. In other cases, the client may request that an accountant simply review certain records for errors or inconsistencies. Tax information such as 1099 forms (Forms 1099-DIV & 1099-INT) and W-2 forms (Forms W-2 & W-3).
This type of information provides a client with a clear picture of his or her business or personal income and expenses. Financial advice such as retirement planning advice or tax planning advice. Clients will often ask their accountants for help in determining how to best invest their money, save for retirement or reduce their tax burden.
Business advice such as determining whether to buy a new business or sell an existing one. Accounting Records And Their Importance: It is important to understand the role that accounting records play in the selection process.
Need to Evaluate the CPA
The first step in evaluating a CPA firm is to examine its audit reports. A firm's audit reports provide a clear picture of the financial and accounting practices of the firm. For example, an audit report will often list potential problems or areas of concern with a client's financial statements, income tax returns or other similar documents.
Auditors will also give recommendations for improving a client's accounting practices. However, it is important to remember that an audit report does not provide clients with all of the information they need to make important financial decisions. In fact, there are many instances where clients may have asked their accountants for more detailed information regarding certain transactions or activities and where they were not provided with this information.
The failure to provide such information may be considered a material misstatement under Section 10 of the Securities Exchange Act of 1934 (the “Exchange Act”). As such, it is important for clients to evaluate other documents which can provide them with this additional information.