Week 1 Discussion Essay

945 Words Oct 24th, 2012 4 Pages
What are the advantages and disadvantages of the primary types of auditors? Which type interests you the most? Explain.

The most common primary types of auditors are certified public accounting firms, government accountability office auditors, internal revenue agents, and internal auditors. CPAs are licensed to express audit opinions on financial statements and are used as independent or external auditors. I’m not currently aware of any disadvantages of being a CPA. GAO auditors work for the federal government and report directly to Congress. In many states GAO audit experience fulfills the experience requirement to be a CPA. Due to vast experience and the scope of their job auditing the federal government, GAO auditors are
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Taxable differences give rise to recording deferred tax liabilities while deductible differences give rise to recording deferred tax assets. A permanent difference results from items that enter into pretax financial income but never into taxable income, or enter into taxable income but never into pretax financial income. Since permanent differences affect only the period in which they occur, they do not give rise to future taxable or deductible amounts. As a result, companies recognize no deferred tax consequences.

When conducting an error analysis, what must a CPA consider? Why? What might happen if these items are not taken into consideration?

The initial considerations must be what type of error is involved, what entries are needed to correct the error, and how are the financial statements to be restated. Three types of errors can occur: balance sheet errors, which affect only the presentation of an asset, liability, or stockholders’ equity account, income statement errors, which affect only the presentation of revenue, expense, gain, or loss accounts in the income statement, or balance sheet and income statement errors, which involve both the balance sheet and income statement. Errors are classified into two types. Counterbalancing errors are offset or corrected over two periods. Non-counterbalancing errors are not offset in the next accounting period and take longer than two periods to correct themselves. If these errors are ignored and

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