Risk based procedure
We don't need the same workpaper for all clients. There may be some advantages, but there are a lot of pit falls in a standardized workpaper.
The standard workpaper needs to be minimum. However, certain areas of particular clients needs to be documented very carefully.
Let's call this a risk based procedure. We need to look at a lot of areas when performing book closing and preparing tax returns, but some areas are much more important than others.
For example, if a client sells a big piece of land, the workpaper for that transaction needs to be documented in details. Not only the numbers, but the accounting/thinking process needs to be documented in details. All workpaper need some kind of comment on it, and especially areas of high risk requires good comment and conclusion.
To be able to show your thinking process is very important for the following reasons; 1) clarify your thinking process, 2) have the review understand what you are doing, and 3) for future readers of the workpaper.
Standardized workpaper is good, but is not good enough. I believe the standardized portion needs to be minimum. (good example is Hiroshi's WP of Mooneyes, although the general tab is missing) It is important for the reviewer and preparer to identify the risk factors and use more time to prepare a good workpaper for that portion. This will probably contribute to the growth of the team members also.
If the item is apparently not very important, don't be afraid to "pass" it. As long as we know why it was passed, we can explain to the client as well as the IRS when audited.
Again, identify the risks. This needs a lot of getting used to, but probably will contribute a great deal to your growth as a CPA.
Iso
The standard workpaper needs to be minimum. However, certain areas of particular clients needs to be documented very carefully.
Let's call this a risk based procedure. We need to look at a lot of areas when performing book closing and preparing tax returns, but some areas are much more important than others.
For example, if a client sells a big piece of land, the workpaper for that transaction needs to be documented in details. Not only the numbers, but the accounting/thinking process needs to be documented in details. All workpaper need some kind of comment on it, and especially areas of high risk requires good comment and conclusion.
To be able to show your thinking process is very important for the following reasons; 1) clarify your thinking process, 2) have the review understand what you are doing, and 3) for future readers of the workpaper.
Standardized workpaper is good, but is not good enough. I believe the standardized portion needs to be minimum. (good example is Hiroshi's WP of Mooneyes, although the general tab is missing) It is important for the reviewer and preparer to identify the risk factors and use more time to prepare a good workpaper for that portion. This will probably contribute to the growth of the team members also.
If the item is apparently not very important, don't be afraid to "pass" it. As long as we know why it was passed, we can explain to the client as well as the IRS when audited.
Again, identify the risks. This needs a lot of getting used to, but probably will contribute a great deal to your growth as a CPA.
Iso
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