A large, national accounting firm decides it is time to outsource the preparation of income tax returns to an organization in India that has performed outsource services for other U.S. CPA firms. The firm will transmit income tax information necessary to prepare the returns electronically and staff accountants in India will prepare the return. The return will then be transmitted back to the United States for final review and approval, and then given to clients. Assume the cost savings for the CPA firm are significant because of the lower salaries paid to chartered accountants in India, and the quality of work in India is as good as or better than that of U.S. tax accountants. Would you recommend that the firm outsource? Why or why not? Be sure to address ethical considerations with respect to the AICPA Code.
Answer to relevant QuestionsIn August 2008, Ernst & Young LLP agreed to pay more than $2.9 million to the SEC to settle charges that it violated ethics rules by coproducing a series of audio CDs with a man who was also a director at three of EY’s ...1. Briefly discuss the rules for revenue recognition in accounting and how they pertain to this case. Does the proposed handling of the $12 million violate those rules? Be specific.2. Assume Carl Land is a CPA and Helen ...1. In commenting on the findings in the consultant’s report, the then-chief accountant of the SEC, Lynn E. Turner, said, “This report is a sobering reminder that accounting professionals need to renew their commitment to ...Rationalization for fraud can fall under two categories: “no harm” and “no responsibility.” Assume an employee is directed by management to reduce recorded expenses at year-end by insignificant amounts individually, ...Mr. Arty works for Smile Accounting Firm as a senior accountant. Currently he is doing a review of rental property compliance testing completed by the staff accountants. He is testing rental receipts and expenses of the ...
Post your question