13 Jan It is time for you

Question
Scenario Summary

A new client enters your office and places a box of receipts and bank statements on your desk, saying that she would like to have a set of financials prepared and tax returns completed for the current tax year. She also states that the financials and the return will be given to her bank as part of the documentation needed to acquire a $300,000 bank loan for home improvement. She would like you to complete the work within a week. As you review the documentation, you note that some of the expenses and receipts for income are not documented. Specifically, she writes expenses to deduct on a piece of paper and provides no supporting documentation. When you request the clarification and additional information from the client, she tells you that she has no more documentation and that is all she can give you.

Listen

Your Role and Assignment

You role in this scenario is to decide what you will do, what you can do, and how to proceed. You are aware that the bank will rely on the financial statements and income tax return that you prepare in making its decision on whether to grant the loan to your client. Do you complete the financials and prepare the tax return? What obligation do you have to communicate to the client as to the type of supporting documentation needed for the filing of a complete tax return? Are there any risks that taxpayers may face as a result of having poor documentation? What are those risks? Would you communicate those risks to the client? What obligation do you have to help her with respect to the preparation of the income tax return?

Listen

Key Players

You Decide

ScenarioYour RoleKey PlayersAssignment

Scenario

You have a small tax accounting preparation and bookkeeping practice. A new client enters your office and places a box of receipts and bank statements on your desk, saying that she would like to have a set of financials prepared and tax returns completed. She also states that the financials and the return will be given to her bank as part of the documentation needed to acquire a $300,000 bank loan. She would like you to complete the work within a week. As you review the documentation, you note that some of the expenses and receipts for income are questionable and you would need more information in order to completely and accurately complete the forms she has requested. When you request the additional information from the client, she tells you that she has no more documentation and that is all you can be given.

Your Role

You role in this scenario is to decide on what you will do, what you can do, and how to proceed. Do you complete the financials, and are you able to prepare the tax returns? What information do you give to the client so that she can present it to the bank in hopes of getting her $300,000 loan? You know that if she does not get the loan, then her business will not be able to continue and she will have to lay off her five employees and close her doors. What obligation do you have to help her and how can you help her?

Key Players

JohnOwnerSueClient

Assignment

It is time for you to make a decision based on the scenario, your role, and the information provided by the key players involved.

If you are finished reviewing this scenario, close this window and return to this Week’s You Decide section to complete the activity for this scenario.

You can return and review this scenario again at any time.Listen

Assignment

Assignment

Prepare a 2 to 3-page paper in APA format citing applicable IRS codes and accounting rules for your decision. The essay should be at least 500 words in length.