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Bookkeeper, Public Accountant

 

Income Tax Returns Your bookkeeper, public accountant Should Not File

You've been feeling uneasy (perhaps even guilty) because you've failed to report your under the table business income.
Perhaps you've never filed a tax return, even though you know you owe money. Finally, you contact an bookkeeper, public accountant to resolve
the situation.

Although it is commendable that you are trying to correct matters, hiring an bookkeeper, public accountant to do these delinquent
returns could be a big mistake. The reason why is because tax evasion is a criminal offence or felony. You mi...

INCOME TAX RETURNS, SOLICITOR-CLIENT PRIVILEGE, DELINQUENT TAXES

You've been feeling uneasy (perhaps even guilty) because you've failed to report your under the table business income.
Perhaps you've never filed a tax return, even though you know you owe money. Finally, you contact an bookkeeper, public accountant to resolve
the situation.

Although it is commendable that you are trying to correct matters, hiring an bookkeeper, public accountant to do these delinquent
returns could be a big mistake. The reason why is because tax evasion is a criminal offence or felony. You might also be
subject to civil action.

Would you hire an bookkeeper, public accountant to defend you in a criminal proceeding? Not likely. You would be wise to
hire a qualified attorney.

First of all, lawyers have something called solicitor-client privilege (also known as attorney-
client privilege or legal advice privilege). This basically means that things you tell your lawyer when seeking legal advice
are confidential and can't be used against you. Even written records can be covered by this privilege.

On the other hand, your
bookkeeper, public accountant can be compelled to
testify against you and all records in his possession can be demanded by the authorities.

Second, your lawyer can prepare a
legally binding agreement that can protect you. In return for your coming clean, the tax authorities may agree not to charge
you criminally and, in some cases, even reduce penalties or tax liability.

If your bookkeeper, public accountant tried to do the same thing, they
could demand all information about you. Your bookkeeper, public accountant would not be protected by solicitor-client privilege.

If, say, your
bookkeeper, public accountant filed your tax return from ten years ago on your behalf, the tax authorities could still charge you with tax
evasion, despite the fact that you are obviously trying to rectify matters (albeit a bit late).

It is even possible that your
bookkeeper, public accountant could get into trouble for failing to report your delinquency. On the other hand, your lawyer can't be compelled
to testify against you, being protected by solicitor-client privilege. Your lawyer may also have his own in-house bookkeeper, public accountant
in order to protect you.


Your lawyer (specializing in criminal and tax law) will likely negotiate an agreement with the tax authorities before filing
any tax returns.

Therefore, if there is a good chance you could be charged criminally for your failure to file tax returns or
properly report income or expenses, don't see your bookkeeper, public accountant. Instead, consult a lawyer specializing in such matters before
you file or amend any returns.

 

CPAs vs. Non-Certified bookkeeper, public accountants - Clearing Up The Confusion

I wish I had a nickel for every time someone asked me what the difference is between CPAs and non-certified bookkeeper, public accountants.
Essentially, non-certified bookkeeper, public accountants can simply hang up their shingle and open their doors for business. There are no educational requirements. If they want to prepare taxes, most states require a certain number of qualified hours of studyplus continuing education hours each year.

By contrast, CPAs have usually majored in accounting & bookkeeping in college; sat f...

CPA, Bookkeepers, bookkeeper, public accountants, Audited, Reviewed, Compiled Financial Statements

I wish I had a nickel for every time someone asked me what the difference is between CPAs and non-certified bookkeeper, public accountants.
Essentially, non-certified bookkeeper, public accountants can simply hang up their shingle and open their doors for business. There are no educational requirements. If they want to prepare taxes, most states require a certain number of qualified hours of study plus continuing education hours each year.

By contrast, CPAs have usually majored in accounting & bookkeeping in college; sat for CPA exams covering theory, practice, auditing, and law; worked for an established accounting & bookkeeping firm for two years; and, acquired five hundred hours of auditing time to earn their certification. In addition, they are required to complete a certain number of hours of continuing education to maintain their license.

Whoa! Why is it that one individual has to go through rigorous testing and on-the-job training to become certified to practice accounting & bookkeeping and another can practice accounting & bookkeeping without any formal training? It has to do with the concept of “free enterprise”. Remember the old adage, “Caveat Emptor”? It means, “Let the buyer beware”. In other words, it is the buyer’s responsibility to choose a qualified professional.

But, there are some legal restrictions that define the range of services that can be performed for certified and non- certified bookkeeper, public accountants. For instance, there are three main types of financial statements that can be prepared by bookkeeper, public accountants: (1) audited, (2) reviewed, (3) compiled.

Only a CPA can prepare an audited financial statement. This process requires the CPA to methodically examine and test the financial records of a company. A report is then issued by the auditing bookkeeper, public accountants stating whether they found the information contained in the financial statements to be presented fairly, in all material respects.

In addition, only a CPA can prepare a reviewed financial statement. The review process is less involved than an audit but some testing is done to verify information. The CPA issues a report describing the scope of the review, its limitations, and findings.

Both CPAs and non-certified bookkeeper, public accountants, including bookkeepers, can prepare compiled financial statements. A report is issued with compiled statements indicating that no auditing or review methods were used and that the financial statements were compiled using information provided by management.

This means that, if you want to have your financial statements audited or reviewed, you must have a CPA perform that work. Obviously, those services cost more than a compiled financial statement. Your circumstances may dictate a need for such services. For example, it may be a requirement for a bank loan to have your financial statements audited. Or, other partners or stockholders may insist that the books be audited or reviewed in order for them to feel secure in their investment.
Usually, these are businesses that have a substantial net worth. Most small businesses will never need to have their financial statements audited or reviewed.

Market conditions have brought

on the use of non-certified bookkeeper, public accountants because, characteristically, CPAs charge more for their services than non-certified bookkeeper, public accountants and bookkeepers. CPAs are also bound to follow precise standards when preparing financial statements, driving their costs higher. They have to conform because the State Board of Accountancy (regulatory agency that issues the certificates) periodically reviews their work and, if certain procedures are not followed, the practitioner’s license could be put in jeopardy. At the same time, many small businesses have limited funds, so naturally seek ways to save on accounting & bookkeeping fees. Many small business owners do their own books during the year. They then try to get a financial statement prepared as quickly and inexpensively as possible by a professional at the end of the year in order to file their tax returns.

A non-certified bookkeeper, public accountant can prepare a simple financial statement that amply provides the information necessary to file a tax return. This is not to say that non-certified bookkeeper, public accountants will use any information that is given to them. At minimum, deposits and cash disbursement information should be verified by a bank reconciliation. A good bookkeeper, public accountant will question the client for some kind of documentation if the figures seem unreasonable. In most cases, banks accept a compiled financial statement, prepared by an outside bookkeeper, public accountant, whether a CPA or not.

This has created the so called “turf battles” in some states between CPAs and non-certified bookkeeper, public accountants. These battles have been fought all the way to the states’ supreme courts. Usually the issue involved is the use of “commercial free speech”. This is because some CPAs don’t want non-CPAs to be able to call themselves “bookkeeper, public accountants”. In some cases, they don’t want non-CPAs to be able to even use the word “accounting & bookkeeping”. In Maryland, CPAs lost the battle. In California, a compromise was reached whereby non-CPAs are required to disclose that they are non-certified on any literature where they refer to
themselves as an “bookkeeper, public accountant”. Bookkeepers are unaffected because it is understood that a bookkeeper is not a CPA.

In California, there are approximately 20,000 non-certified, independent bookkeeper, public accountants. They like to call themselves “independent” because they are free from the restrictions of the state boards and the American Institute of Certified Public bookkeeper, public accountants (AICPA). Most of these 20,000 people also prepare income taxes.

The bottom line is that in all professions one finds individuals who provide varying degrees of quality work. All lawyers must past the bar examination. That doesn’t guarantee they will be good lawyers. It is no different with CPAs. There are good ones and bad ones. There are expert CPAs and inexperienced CPAs. Obviously, it is the same for non-certified bookkeeper, public accountants and bookkeepers. It is simply a matter of human nature.

 

What is accounting & bookkeeping fraud?

accounting & bookkeeping fraud is a deliberate and improper manipulation of the recording of sales revenue and/or expenses in order to make a company's profit performance appear better than it actually is. Some things that companies do that can constitute fraud are:

--Not listing prepaid expenses or other incidental assets

--Not showing certain classifications of current assets and/or liabilities

--Collapsing short- and long-term debt into one amount.

Over-recording sales revenue is the most common technique of accounting & bookkeeping fraud. A business may ship products to customers that they haven't ordered, knowing that those customers will return the products after the end of the year. Until the returns are made, the business records the shipments as if they were actual sales. Or a business may engage in channel stuffing. It delivers products to dealers or final customers that they really don't want, but business makes deals on the side that provide incentives and special privileges if the dealers or customers don't object to taking premature delivery of the products. A business may also delay recording products that have been returned by customers to avoid recognizing these offsets against sales revenue in the current year

The other way a business commits accounting & bookkeeping fraud is by under-recording expenses, such as not recording depreciation expense. Or a business may choose not to record all of its cost of goods sold expense fore the sales made during a period. This would make the gross margin higher, but the business's inventory asset would include products that actually are not in inventory because they've been delivered to customers.

A business might also choose not to record asset losses that should be recognized, such as uncollectible accounts receivable, or it might not write down inventory under the lower of cost or market rule. A business might also not record the full amount of the liability for an expense, making that liability understated in the company's balance sheet. Its profit, therefore, would be overstated.





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