So, I've been working (fairly independently) with my partner for 5 tax seasons now. I've never bothered to look at his business workpapers. I was trained 20 years ago, you review the balance sheet and tie out all make that most accounts, making adjusting journal entries to get everything tied out. Then of course you make whatever Federal Tax Journal Entries are necessary to prepare the returns.
Apparently, and I'm shocked by this, he takes the books, and checks for reasonableness. And he'll quickly glance through the P&L detail to make sure there are no auto loan payments in auto expense, etc.
But that's it. He then takes the client trial balance and inputs it into the returns. He makes the assumption the client books as they have come to him are correct. (ties out retained earnings of course).
He then proceeds to bill clients more than I bill. (we are essentially a cost-sharing partnership only).
So, in my mind, I'm thinking this falls somewhere between cheating and malpractice. But maybe I'm wrong. Is my approach of creating a workpaper with each year-end bank and credit card reconciliation, each loan balance, etc an incorrect one?
Interestingly we were each trained in our early years to use the methodology we use.
How detailed are you in tying out/confirming the balance sheet accounts?
Frankly it might drive me crazy to change, but if it's standard protocol to rely on the client books more than I am, I'll figure out a way to change. Would certainly save me a ton of time I don't have...