While preparing a client's individual federal tax return, the CPA noticed that there was an error in the previous year's tax return that was prepared by another CPA. The CPA has which of the following responsibilities to this client?
a.
Notify the IRS if the error could be considered fraudulent or could involve other taxpayers.
b.
Inform the client and recommend corrective action.
c.
Inform the client and the previous CPA in writing, and leave it to their discretion whether a correction should be made.
d.
Discuss the matter verbally with the former CPA and suggest that corrective action be taken for the client.
Choice "B" is correct. When an AICPA member becomes aware of an error in a previously filed return, he should promptly notify the taxpayer.Choice "c" is incorrect, per the above explanation.Choice "d" is incorrect, per the above explanation.Choice "a" is incorrect. A tax preparer is not required to notify the IRS and may not notify any taxing authority without the client's permission.
