27-Auditing OCAOB Flashcards
1
Q
When IRS adjustment of an item of FS occur, what does it’s treatment depend on?
A
a. If the adjustment relates to an error in the tax return of a prior year, then a prior period adjustment is appropriate;
b. If the adjustment relates to an item that is not an error and is not balance sheet related, then the adjustment would be treated as a current period expense (or income);
c. If the adjustment relates to an item that is not an error and is balance sheet related, then the adjustment would be treated as a prior period adjustment.
