Ethical Obligations and Decision-Making in Accounting 2nd Edition by Steven Mintz, Roselyn Morris

Exercise 18

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 U.S. for final review and approval, and then given to clients. Explain the ethical concerns of outsourcing income tax returns. 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 or better than that of U.S. tax accountants. Would you recommend the practice to the U.S. firm? Why or why not? Be sure to address the ethical issues of concern that influence your decision.