Chapter 1, Problem 1RQ

What are the information and established criteria for the audit of Jones Company’s tax return by an internal revenue agent? What are they for the audit of Jones Company’s financial statements by a CPA firm?

To determine

Provide the information and established criteria for audit of Company J’s tax return by the internal revenue agent and also explain the matters that are considered for audit of Company J’s financial statement by CPA firm.

Explanation of Solution

Information should be available in verifiable form and maintain the standards that are required by the auditor to evaluate the information. The information to be received for Company J tax return is from the federal tax returns that are filed by the company, moreover the criteria for establishment are provided by the Internal Revenue code and its interpretations. Whereas, financial statement of Company J are audited by the criteria provided by Country U GAAP or IFRS.