Recent survey reports increase in number of tax deficiencies

Our readers in the Sacramento area may be interested in a recent survey regarding tax deficiencies. (For those who don't know, the IRS will send a notice of deficiency if the amount reported by a taxpayer is less than the amount the IRS determines is owed.) The Public Company Accounting Oversight Board analyzed the results of the survey, and the analysis was published on June 6 by Acuitas, Inc.

The survey found that fair value measurement and impairment deficiencies accounted for more than 50 percent of the audits with deficiencies that were cited in the PCAOB's 2010 inspection reports. Though not every deficiency noted by the IRS results in an audit, the recently published numbers represent a tripling of the number of deficiencies since 2009, and the percentage of audits with deficiencies doubled in that same period.

The uncertainty engendered by the economic recession is more than likely the major cause of so many current audits with deficiencies. There is a direct relation between audits with deficiencies and the problems of fair value measurement and asset impairment. Sometimes a company's management miscalculates assets and impairments, and that kind of mistake is understandable. However, it is of course desirable to avoid an audit that is based on mistaken fair value measurement or a tax deficiency.

If business owners feel that there may have been an error in their own valuations, then it is advisable to make sure that a CPA promptly reviews the information. If further help is necessary, it is a good idea to seek advice from legal professionals who can help in appealing the results of an audit.

Source: Accounting Today, "Audit Firm Deficiencies Have More than Doubled," Michael Cohn, June 6, 2012

No Comments

Leave a comment
Comment Information

Contact the Law Office of Williams & Associates

For more information about our tax law services, or to discuss your tax matter, call our Sacramento office at (916) 488-8501 or toll free at (800) 684-7147. You may also send us an inquiry via email.

Contact the Firm

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Office Location:

3600 American River Drive, Suite 135
Sacramento, CA 95864

Toll Free: 800-684-7147
Phone: 916-488-8501
Fax: 916-488-8196
Sacramento Law Office Map