UNM The Review of Unrealized Gain and Loss Activity Bad News Email

You just landed a management position with a CPA firm! You are reviewing a tax return for a returninghigh net worth client and you have discovered an error. This is a high-profile client for the firm that hasprovided many referrals.The firm you work for provides bookkeeping and tax preparation services to this client. You havediscovered that the bookkeeper has been reporting the unrealized gain/loss to the income statement whenreconciling the investment account. To further compound the problem, the tax preparer and priormanager have been reporting the unrealized gain/loss activity as an adjustment to revenue on the TaxReturn. Also, the error goes back 5 years, when the firm started working on the account (yes, theaccounting and tax return were correctly prepared by the prior accountant). The amount of revenuerecognized from unrealized gain/loss averaged $175,000 annually over the last 5 years.This client’s preferred mode of communication is through e-mail. Draft an email in a letter form to the clientexplaining the error and the consequences. (Don’t forget about the statute of limitations for amendedreturns!) Write only one page.