Tax Practice Quality Control Achieving Balance Without Sacrificing Quality. Presented by Jina Etienne, CPA Director - Taxation, Member Service & Ethics Presented at the MACPA’s Practitioner’s Conference October 23, 2012 Tax Section Joined AICPA January 31, 2011 In private practice over 17 years • Managing Member of CPA firm in Silver Spring, MD • Firm specialized in tax services for small businesses & individuals Started career in 1988 in tax department of Touche Ross Served two years on PCPS EC Jina Etienne, CPA Director – Taxation, Member Service & Tax Ethics 2
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Tax Practice Quality ControlAchieving Balance Without Sacrificing Quality.
Presented by
Jina Etienne, CPADirector - Taxation, Member Service & Ethics
Presented at the MACPA’s Practitioner’s Conference
October 23, 2012
Tax Section
Joined AICPA January 31, 2011
In private practice over 17 years• Managing Member of CPA firm in Silver
Spring, MD
• Firm specialized in tax services for small businesses & individuals
Started career in 1988 in tax department of Touche Ross
Served two years on PCPS EC
Jina Etienne, CPADirector – Taxation, Member Service & Tax Ethics
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Tax Section
Quality Control System defined
Factors that influence a QC system
Walk-through system components
Explore real-life examples
What am I going to talk about?
Please ask questions as
we go …
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Tax Section
Tax Practice Quality Control System - Defined
Consists of organizational structure, policies and procedures
Evidenced by Tax Practice Quality Control document
Purpose is to provide reasonable assurance of compliance with applicable statutory, regulatory, and professional requirements
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Tax Section
Why is it Relevant?
Applicable to all practices
Assists compliance with• statutory and regulatory requirements
• professional standards
Minimizes the risk of professional liability
Now required by Circular 230
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Tax Section
Update! Friday, September 14th – NewProposed Regulations on Circular 230
IRS released proposed regulations to Circular 230
Changes include:• Elimination of the complex rules in governing covered opinions
• Broaden the scope Section 10.36 that require procedures that for purposes of complying with all provisions of Circular 230
• Clarifies that practitioners must exercise competence when engaged in practice before the IRS
• Includes failures to comply with a practitioner’s personal tax filing obligations that demonstrate a pattern of willful disreputable conduct under Section 10.82
31 CFR Part 10, [REG-138367-06], Regulations Governing Practice Before the Internal Revenue Service
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Tax Section
Factors that Influence QC System
Practice Size?
Number of offices?
Degree of authority granted?
Knowledge and experience?
Nature of practice?
Specialties?
Other factors?
Cost-benefit considerations?
Practice Areas?
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Tax Section
My “Box” System…
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Received Prepared
Missing Information
‐ Assembly‐ Delivery‐ File
When I first started my practice…
All firms have a system that includes these processes…
FIFOFIFO3 Day Hold3 Day Hold
Tax Section
Leadership responsibilities
Ethical requirements
Acceptance of client relationships
Human resources function
Engagement performance
Monitoring of QC system
Elements of a Quality Control System
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“Rules”
Definitions and requirements
“Reality”
Explore real-world examples
Rules vs. Reality
Let’s look at each element from two perspectives:
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Tax Section
Leadership Responsibilities
Assume ultimate responsibility
Quality of work overrides profits
Appropriate experience and authority
Clear and continuous communication
Dedicate sufficient resources
Demonstrate commitment to the Quality Control system
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Tax Section
The Tone at the Top
Develop a culture that quality is an essential part of your work as a firm