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Hi,
on provision of service to an audit client, the general term is not to assume management’s responsibility and if it is a listed entity the service should not have direct impact on the financial statements that will be audited. sir, assistance with preparation of tax return was marked as service that the audit partner can provide(BPP question 25). on the ground that it is based on historical information. However, the audit will still be applied to verification of the tax accruals/liability at some point. so the audit team could be testing the figure they are actually involved in, therefore creating self review threat. in this line, i thought it has direct impact on the financial statements.
could you please explain this further.
thanks, Kim.I agree with what you say but there is also the fact that the tax return will be submitted to an authority for verification/validation/agreement – e.g. HMRC in the UK. So given the “rules-based” nature of a tax return and that it is based on historic financial information, the service would be permitted with appropriate safeguards – which generally means by a separate “tax” department.
thanks so much. it now makes sense haha . I love to give it a thought always. love the practical nature of this subject. Thanks kim.
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