Week 1 CPA Report - 1 Running head CPA REPORT CPA Report CPA Report Jeena Cao ACC/545 May 5 2011 Steven Sanders 2 CPA Report This informative memo

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Running head: CPA REPORT CPA Report Jeena Cao ACC/545 May 5, 2011 Steven Sanders 1
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CPA Report This informative memo was asked by the company’s manager to give the outside CPAs information needed to examine the subsidiary that has been set up as a corporation. To further their review, they requested explanations about the method used to determine deferred taxes, the procedure for reporting accounting changes and error corrections, and the rationale behind establishing the subsidiary as a corporation. The manager personally requested to information about the responsibilities of a CPA and the differences between a financial review report and a financial audit report, which the response is also include in this memo. Methodology used to Determine Deferred Taxes There are two types of tax-deferred entries, it can either be a permanent (difference) tax deferred entry or a temporary (difference) tax deferred entry. A permanent difference is irreversible expenses such as money spent on fines from disobedience of the law. Permanent differences are items not eligible to record into the taxable income, or it is taxable but not recorded into the financial income book. On the other hand, a temporary difference is reversible, which is future taxable or future deductible. The timing depends on when the revenue or expense is recognized. Procedures for Reporting Accounting Changes and Error Corrections The Generally Accepted Accounting Principles (GAAP) governs accounting and auditing procedures and regulations. There are several methods a company can use to customized their
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This note was uploaded on 06/25/2011 for the course ACC 539 $21 taught by Professor Mr.someone during the Spring '09 term at University of Phoenix.

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Week 1 CPA Report - 1 Running head CPA REPORT CPA Report CPA Report Jeena Cao ACC/545 May 5 2011 Steven Sanders 2 CPA Report This informative memo

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