CPA — Pre-Delivery Return Review

Activate when: a prepared 1040 or 1120-S is going to review; you are the second set of eyes on someone else's return; a firm wants one consistent review standard across reviewers; onboarding a preparer to the review bar; something feels off about a return and you want a systematic pass; user says 'review this return', 'before we file', 'second review', 'preparer checklist', 'did we miss anything on this return?'. Do NOT activate when: the return is not yet prepared; the question is a single technical treatment; the work is chasing missing documents rather than reviewing; the question is what an examiner would attack or whether a position invites audit rather than whether the return is right (use tax-prep-pre-file-audit-premortem instead — it applies to 1120-S as much as 1040). More: deciqai.com/c/cpa-return-review

Not legal or tax advice. No thresholds, limits, rates, or dates appear here — all of them expire. Verify every amount and every rule against current IRS/state guidance and current-year software logic. The practitioner who signs owns the return.

Activate when: a return is prepared and going to review; you are reviewing someone else's work; you want the same discipline applied by every reviewer in the firm. Do NOT activate when: you are preparing rather than reviewing; the question is one isolated treatment; the question is what an examiner would attack rather than whether the return is right — that is [tax-prep-pre-file-audit-premortem], on 1120-S as much as on 1040.

Why this skill

Errors that reach clients are rarely exotic. They are a carryover nobody re-checked, a state that quietly changed, a name spelled two ways, an election made last year and forgotten this year, and a number that is technically correct but obviously wrong next to last year's.

Reading a return top to bottom hunting for mistakes finds what you already suspect and nothing else. Different error classes hide from different kinds of attention, so the review is five separate passes with five different questions — not one careful read.

Process

Run in order. Each sweep is its own pass.

Sweep 1 — Identity and posture

Boring, and the source of the most embarrassing errors.

• Legal names match official records exactly, including suffixes and hyphenation
• Taxpayer identification numbers correct against the taxpayer's own records
• Tax year correct on every form and schedule
• Filing status reflects facts collected this year, not carried over
• Dependents current — ages, relationships and eligibility change annually
• Address current and consistent with the states being filed
• Entity name, identifier, formation state match the organizing documents (1120-S)
• Shareholder roster current, including mid-year changes (1120-S)
• Direct deposit / payment details verified this year, not carried forward
• Preparer identifiers and signature blocks complete
• Paid-preparer due-diligence checklist completed and retained for every covered credit and for head-of-household — see [tax-prep-8867-due-diligence]. A per-return penalty gate, and the one Sweep 1 item that costs money on its own rather than through a wrong number
• Taxpayer e-file authorization signed and dated for the correct return and year, before transmission
• Any consent required before disclosing or using taxpayer information obtained in the required form and sequence
• Every other required signature, election statement and attachment present

1120-S annual check: the S election is documented in the permanent file and nothing this year threatens it — an ineligible shareholder, a second class of stock created by a side agreement, a shareholder-count change. Checked once a year, and this is where.

Sweep 2 — Prior-year comparison

Open last year beside this one. Every material change needs a one-sentence explanation.

• Every line present last year and absent this year — where did it go? Account closed, property sold, or oversight?
• Every line new this year — what happened?
• Every line that moved materially — why?
• Carryovers identified, correct, and traced from the prior return rather than retyped
• Prior-year elections still in effect, still appropriate, still consistently applied
• Depreciation continuity: prior assets present, methods and lives unchanged unless deliberately changed
• Basis and capital account continuity (1120-S)
• Shareholder stock and debt basis tracked and current — and where a shareholder claims a loss, takes a distribution, disposes of stock, or receives a loan repayment, Form 7203 is prepared and attached to that shareholder's return. Most commonly missed item at the entity-to-owner handoff: each preparer assumes the other did it.
• International items requiring Schedules K-2/K-3 identified, and K-3 delivered to shareholders (1120-S)
• Accounting method unchanged, or the change is deliberate and documented
• Same set of state filings as last year? One added or dropped needs a reason on the record

Gate: a disappearing line item outranks a wrong number. Wrong numbers get caught by review; missing items get caught by nobody, because there is nothing on the page to look at.

Sweep 3 — Internal consistency

• Schedules and statements tie to the summary lines they feed
• Totals foot; subtotals sum to totals
• A figure appearing in more than one place is the same figure everywhere
• Federal-to-state amounts consistent, or the difference is a known intentional adjustment
• Entity-to-owner and entity-to-entity amounts consistent
• Where a balance sheet is included, it balances and beginning equals prior-year ending (1120-S Schedule L — whether it is required depends on current-year criteria; confirm, don't assume)
• Book-to-tax reconciliation ties (Schedule M-1 or M-3 as applicable)
• Accumulated adjustments account rolls forward correctly (Schedule M-2)
• Shareholder allocations sum to 100% and match ownership including mid-year changes
• Every attached statement is referenced from a form, and every referenced statement is attached

Sweep 4 — Source traceability

For each material number, point at the document. If you cannot, that is the finding.

• Every income item traces to an information return, statement, or client records
• Every information return received is reflected, or its exclusion is documented
• Deductions and credits have support at the level firm standards require
• Estimated payments and withholding trace to payment records, not client recollection
• Numbers from a client's verbal statement are flagged as such
• Amounts from bookkeeping tie to the trial balance you were given (1120-S)
• Payment-settlement information returns are reconciled to gross receipts, not added on top — double-counting here is common and the client will not catch it

Gate: if a number's only source is "the software brought it forward," it has not been verified this year. Carryforward is a convenience, not evidence.

Sweep 5 — Reasonableness

Look at the whole return as a stranger would.

• Does the picture match what you know about this client's actual year?
• Does income support their evident circumstances?
• Large round numbers where you would expect precision?
• Anything conspicuously out of proportion to the rest?
• A category far off what similar clients show, with no known reason?
• Does the outcome match what the client was told to expect — and if not, do they know yet?
• Would you be comfortable explaining every material position out loud to someone who asked why?

That last question is the sweep compressed to one line. Any "no" stops delivery until resolved.

Findings

Write findings down. A silent fix teaches the preparer nothing and leaves no record.

Finding · Location (form/schedule/line) · Severity · Disposition · Resolved by/when

Severity: BLOCKER (cannot file) · CORRECTION (must fix) · QUERY (need an answer) · NOTE (next year).

Gate: nothing filed with an open BLOCKER or CORRECTION. A QUERY either resolves or converts to a documented acceptance with a stated rationale.

NOTE items are next year's planning and chase list, free to collect now while the context is in your head.

Worked example

1120-S, second year, prepared by an experienced preparer. Sweeps 1, 3 and 4 came back clean.

Sweep 2 found a repairs-and-maintenance line at roughly six times prior year with no explanation. Not wrong on its face — the client had bought a building. Sweep 5 then asked the stranger question: would you explain that number out loud? The work turned out to include a roof replacement, a capital item sitting in a deduction line.

Neither sweep alone would have caught it. Sweep 2 flagged the movement; Sweep 5 refused the easy explanation. The comparison sweep finds the anomaly; the reasonableness sweep refuses to accept the first story that fits it.

Compliance anchors

Circular 230 §10.22 (due diligence), §10.34 (standards for returns) · AICPA SSTS §2.1 (tax return positions), §2.3 (reliance on information from others), §2.4 (use of estimates), §2.5 (departure from previous positions), §1.2 (knowledge of errors) · IRC §6694 (preparer penalties) · firm quality-management standards.

Packs

• Solo: Sweeps 1 and 2 on every return, all five on anything complex. Sweep 2 is non-negotiable — it is the only one where last year does the work for you.
• Firm: all five with a written findings log; NOTE items harvested into next season's planning list; recurring findings by preparer reviewed at season end as a training input rather than a performance one.

Red flags

• The reviewer opened the return without opening last year's.
• Findings were fixed but not logged.
• A QUERY was closed because the deadline arrived, not because it was answered.
• Sweep 5 is being skipped as "soft" — it is the only sweep that catches a correct-looking wrong answer.
• The preparer and reviewer are the same person and nobody has said so out loud.
• Client was told an expected outcome weeks ago and the return no longer matches it.

Common Rationalizations

Rationalization	Reality
[D] "The software would have caught it."	Software validates internal arithmetic. It has no view on whether last year's rental disappeared.
[O] "It ties out, so it's fine."	Sweep 3 is one of five. A return can be perfectly self-consistent and wrong at the source.
[O] "It's an experienced preparer."	Experience shifts the error class from arithmetic to carryover and judgment — exactly what Sweeps 2 and 5 target.
[D] "Reasonableness is subjective."	It is judgment, which is what a reviewer is for. The test is operational: can you say it out loud to someone who asks why.
[O] "We're out of time."	Then extend. Filing with an open BLOCKER converts a time problem into a liability.
[O] "The client approved it."	Client approval is not review. They are approving a document they cannot audit.

Verification

• All five sweeps run as separate passes, in order
• Prior-year return open during Sweep 2
• Every material change explained in one sentence
• Form 7203 considered for every shareholder who triggers it
• Every material number traced to a source, or flagged as untraced
• Findings logged with severity and disposition, not silently corrected
• Zero open BLOCKER or CORRECTION at filing
• NOTE items captured for next year

Related: [checklist] for the mechanics of a discipline that survives fatigue · [cpa-doc-chase] for the items Sweep 4 finds missing · [tax-prep-8867-due-diligence] for the Sweep 1 due-diligence gate in full · [tax-prep-pre-file-audit-premortem] for the adjacent question — this skill asks whether the return is right, that one asks what an examiner would attack · [confirmation-bias] for why reading top-to-bottom only confirms.

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Part of deciqAI Knowledge Skills — 237 open-source thinking skills that make rigor executable for AI agents. The same skills power every deciqAI agent, which runs them autonomously to operate your company. See it run → https://www.deciqai.com/c/cpa-return-review · ⭐ Star the repo → https://github.com/deciqAI/knowledge-skills · Contributions welcome.

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