This week we discuss transparency, highlighting the difference between illegal and potentially unethical activities.

You are the office manager for John Bergman, CPA, a small accounting firm in Ohio. It is a healthy business with a strong mix of small business and individual returns. John is a good employee and active member of the community with a history of volunteering and loyal customer base. The issue is John Junior.

It has always been John's plan for John Junior to take over the practice, and Junior recently passed the CPA exam. John is ready to return, and John Junior is already looking to put his mark on the business. John Junior likes to think of himself as "on the edge of cutting technology" and "ready to take it to the streets" to take on the local H&R Block and Jackson Hewitt offices that handle such a large portion of individual tax returns every year. Junior is excited about a new opportunity he thinks will give the firm an advantage over larger competitors. Junior's plan is to send all the firm's tax returns to a company in India that will guarantee the return will be prepared in less than 48 hours by accountants in its offices who are US licensed CPAs. The term for this is outsourcing. This, according to Junior, will allow the firm to go after the more labor-intensive but profitable corporate returns t tax time instead of having all employee time taken up with the individual returns. He has calculated that the price paid to outsource the returns will allow the firm to undercharge compared with the bigger firms. Junior is already planning a big advertising campaign.

You are concerned because Junior does not plan to tell clients about the idea. He's not going to mention that someone else (who he's never met) will be preparing the tax return or that the customers' personal information will be e-mailed to India to complete the return. He says customers will not care as long as the return is quick, accurate, and cheaper than the other guys. With all those ads for "immediate refunds," he has a point, but the question is his failure to disclose.

1. Should you be concerned about John Junior's plan? Is his plan ethical? Why or why not?

2. John Junior is obviously focusing on the money to be saved (and made) with this plan. What are the issues he is not considering? Would the plan still succeed if John Junior disclosed all the details?

3. Do you think John Senior has signed off on this plan? If not, should you tell him? Why or why not?