Does preparing a tax return provide assurance about client income?
No. A tax return preparation engagement is not an audit, review, compilation, examination, or agreed-upon procedures engagement. The CPA may have used client-provided information to prepare the return, but that does not mean the CPA verified the client's books or expressed a conclusion about income.
In a lender request, this distinction matters. The CPA can sometimes say what a filed return reports, with client consent and careful wording. The CPA should not say the income is accurate, recurring, sustainable, or sufficient for a loan unless a separate engagement supports that conclusion.
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