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Cpa Memo

In: Business and Management

Submitted By rgeisler
Words 524
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Memo

Date: 5/17/2011

TO: JANE SMITH, MANAGER

FROM: ROBIN GEISLER

RE: CPA REPORT

This memo is in reference to the request that was received to conduct a review on a sister company of a large organization. This subsidiary company is set up as a corporation. It is the responsibility of the CPA to assure that the financial statements are prepared correctly and there are no misstatements or errors. It is also important to ensure that all information concerning the corporation in question is kept safe and secure. The performance of this corporation needs to be review to ensure that it is managed effectively and that everything is running efficiently. This request is a review of the corporation in question and not an audit. An audit is conducted to determine if the financial statements are correctly prepared and present fair and accurate information. Tests are conducted in an audit to detect if fraud has been committed and to evaluate the effective use of internal control. Supporting documentation is sometimes provided to prove and verify information within the financial statements. A review is different in several ways. A review does not always take the whole company into consideration. Usually a review will focus on a certain area of the company and provide an opinion on just those areas. For example, in this request the CPA’s of the large organization want information on one of their subsidiaries. Their concerns rest in the area of deferred taxes and reporting and correcting errors and changes to the accounting standards. They also are concerned with the reasoning behind actually making a subsidiary into a corporation.

Deferred taxes can be assessed on assets and liabilities. If the deferred tax concerns an asset, it means that the taxes have been paid but have not been reported on income statement. If the deferred tax concerns a liability, it

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