The IRS has a formalized and generally well- defined process of review for taxpa

Question

The IRS has a formalized and generally well- defined process of review for taxpayer compliance or "administrative procedures."

Write a two page paper, discussing the following:

You have a small tax practice advising individuals and small to medium size domestic-only businesses. A client has just received notice from the IRS of an audit of several years' returns.

Discuss how you will prepare the client for the audit.

How will you provide guidance through the audit process from the beginning to conclusion?

Your completed assignment should be a minimum of 2 pages (700 words).

Explanation / Answer

We allocate the responsibility to client and Management as below.

• Management is responsible for establishing and maintaining effective internal control over financial reporting.

• Management is responsible for designing and implementing programs and controls to prevent and detect fraud.

• Management is responsible for identifying and ensuring that the entity complies with the laws and regulations applicable to its activities.

• Management is responsible for making all financial records and related information available to the auditor.

• At the conclusion of the engagement, management will provide the auditor with a letter that confirms certain representations made during the audit.

• Management is responsible for the entity's financial statements and the selection and application of the accounting policies. Management has to provide the adequate information and supporting documentation to auditor as requested by the auditor.

• Management is responsible for adjusting the financial statements to correct material misstatements and for affirming to the auditor in the management representation letter that the effects of any uncorrected misstatements7 aggregated by the auditor during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole.

The Client should communicate the below point to auditor

The overall audit strategy

• Involvement of specialists or internal auditors, if applicable

• Involvement of a predecessor auditor

• Fees and billing

• Any limitation of or other arrangements regarding the liability of the auditor or the client, such as indemnification to the auditor for liability arising from knowing misrepresentations to the auditor by management (regulators may restrict or prohibit such liability limitation arrangements)

• Conditions under which access to audit documentation may be granted to others

• Additional services to be provided relating to regulatory requirements

• Other services to be provided in connection with the engagement, for example, nonattest services, such as accounting assistance and preparation of tax returns subject to the limitations of Ethics Interpretation

We forward the information to company staff then there can prepare for audit with required information and other document.

We divided the staff into groups and we nominate the one experience person as a team lead. The lead person will guide the total team number in correct direction.

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