Question: While preparing this years tax return, a CPA discovers that the client has underpaid his income taxes due to an omission on last years tax

While preparing this year’s tax return, a CPA discovers that the client has underpaid his income taxes due to an omission on last year’s tax return, which was prepared by another accountant. According to the Statement on Standards for Tax Services, the CPA preparing this year’s tax return:

a. Must report it immediately to the IRS.

b. Must advise the client of the omission and recommend appropriate action.

c. Should refuse to sign the current tax return.

d. Is not expected to address issues that relate to previous tax returns.

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