Tax Preparation Scenario Summary You have a small tax accounting preparation and bookkeeping practice. A new client enters your office and places a box of receipts and bank statements on your desk and says that she would like to have a set of financials prepared and tax returns completed. She also states that the financials and the return will be given to her bank as part of the documentation needed to acquire a $300,000 bank loan. She would like you to complete the work within a week. As you review the documentation you note that some of the expenses and receipts for income are questionable and you would need more information in order to completely and accurately complete the forms she has requested. When you request the additional information from the client, she tells you that she has no more documentation and that is all you can be given. Your Role/Assignment You role in this scenario is to decide on what you will do, what you can do and how to proceed.

Do you complete the financials and are you able to prepare the tax returns? What information do you give to the client so that she can present it to the bank in hopes of getting her $300,000 loan? You know that if she does not get the loan, then her business will not be able to continue and she will have to lay off her 5 employees and close her doors. What obligation do you have to help her and how can you help her? citing applicable IRS codes and accounting rules for your decision.. Key Players John / Owner: John wants to help the new client, as he knows that she needs the loan and he would like to have her continue as his client. He feels that she can add significant income to his business. But he wonders why her previous provider is not completing the work. Sue / Client: Sue has a small business that manufactures household knick knacks. She employees 5 people on a full time basis and have been in business for 3 years. She wants to expand and needs the $300,000 loan in order to do so. She has had an accountant in the past, but the accountant left her 6 months past and she has been trying to do the accounting work on her own.