Abstract
In this article, we examine the American Institute of Certified Public Accountants’ (AICPA) efforts to conceal the offshoring of tax return preparation services by U.S. Certified Public Accountants (CPAs) through recommending an inadequate disclosure format for this type of work. We draw on Giddens’ theory of trust and expert systems, the professionalism literature, and Flyvbjerg’s concept of power to analyze the underlying agenda behind the revised ethics rulings (AICPA Ethics Ruling No. 112 under Rule 102, No. 12 under Rule 201, and No. 1 under Rule 301). Specifically, we examine (1) the AICPA leadership’s stated professional justifications for outsourcing and its recommended client disclosures, (2) risks associated with outsourcing tax return preparation work overseas and the trust issues that result, and (3) the resistance to the AICPA leadership’s recommended outsourcing disclosure rules within the rank and file of the CPA profession. We argue that our analysis reveals the AICPA’s on-going promotion of their private interests, thus continuing to raise systemic concerns regarding the public’s trust in the U.S. public accounting profession.
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Notes
For instance, Barry Melancon (President and CEO of the AICPA) fought the SEC over auditor independence rules that Levitt and Turner (Arthur Levitt, former Securities & Exchange Commission chairman; Lynn Turner, former SEC chief accountant) claim would have stopped conflicts involving auditors selling consulting services to their audit clients. Douglas Carmichael, Director of the Center for Financial Integrity at Baruch College in New York, claimed that the AICPA did not tighten the rules such as requiring auditors to provide detailed documentation for an audit or to query lower-level management for problems (Macdonald 2002).
AICPA rules require compliance with IRS regulations. Thus, practicing CPAs who were affected by the new IRS outsourcing disclosure rules were instructed to reevaluate and amend their firm policies and procedures to ensure compliance. Specific changes in firm policy would be made based on the firm’s interpretations of IRS rules (Jamouneau 2009).
The manager reminded the authors of the strict procedures in place, starting with what kind of equipment individuals are allowed to carry on to the premises. The authors were asked to check laptops and cell phones at the front desk and were allowed to bring in the voice recorder for the interview only after it was examined. They were checked thoroughly and did not have access to any of the client areas, and each part of the building had a variety of entry and access barriers.
International and British standards for management systems are recognized as providing best management practice in a number of key disciplines (Desai and Mcgee 2010a, b). The International Organization for Standardization (ISO) is the world's largest developer and publisher of international standards while BSI (British Standards Institution) is a United Kingdom-based global certification organization..
Citrix Systems, Inc. is a multinational corporation founded in 1989, that provides server and desktop virtualization, networking, software-as-a-service (SaaS), and cloud computing technologies, including Xen open source products.
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Desai, R., Roberts, R. Deficiencies in the Code of Conduct: The AICPA Rhetoric Surrounding the Tax Return Preparation Outsourcing Disclosure Rules. J Bus Ethics 114, 457–471 (2013). https://doi.org/10.1007/s10551-012-1329-z
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DOI: https://doi.org/10.1007/s10551-012-1329-z