Questions

Apr 15th, 2014
KateS
Category:
Accounting
Price: $15 USD

Question description

1. Financial statement fraud has been a major problem, with company failures or forced mergers often following.  Obviously, in such a case the owners (stockholders) bear the brunt of the loss.  Naturally, losses suffered by stockholders are deductible for income tax purposes.  Since these deductions result in reductions in income tax liabilities, and they result from the fraud someone perpetrated, does this amount to a subsidy of the financial statement fraud from the federal government, and some state governments?

2. While we're on the subject of taxes and fraud, there's an interesting potential case winding its way through the IRS appeals system, as I understand it.  Basically, a company engaged in financial statement fraud, overstating net income. As part of covering the fraud, they made the same overstatement on their income tax returns.  Once the fraud was uncovered, they restated their financial statements, and filed amended income tax returns, asking for a substantial refund.  Since this is a result of fraud, should the company be entitled to a refund of their overpaid taxes, which were based on the overstatement of income? 

3. Auditing standards provides guidance on the procedures to be followed in the event an auditor discovers they omitted important audit procedures, but the discovery is not made until after the audit report is released. What is your opinion of the procedures? Do you think the procedures fully address the issue?  Why or why not?

Tutor Answer

(Top Tutor) Daniel C.
(997)
School: UIUC
PREMIUM TUTOR

Studypool has helped 1,244,100 students

Summary
Quality
Communication
On Time
Value
Five Star Tutor
Feb 17th, 2017
" Outstanding Job!!!! "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1831 tutors are online

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors