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CPA Professional Standards

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Explain economic issues that bring concern to pricing tax services. Are there any ethical challenges when hiring non-CPAs to do taxes (using new IRS laws)? What standards apply?

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Solution Summary

This solution discusses economic issues that are concerning to pricing tax services, the ethical challenges present when hiring non-CPAs to do taxes, as well as the standards that would be applied.

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In developing a pricing structure for any service or product, it is important to consider the short term and long term affects. There are many methods unethical methods to lower prices and or increase profitability, everything from reducing product quality, to cutting corners. However, the legal and trust ramifications of these actions must be considered. For example, in 2002 the Denver Post posted an article about 2 brothers who had moved from Iran and become an American Success story, building one of the largest dry cleaning businesses in the Western United States. However authorities discovered that the brothers were cutting costs by illegally dumping perchloroethylene, a solvent. This saved the brothers 100s of thousands of dollars per year, allowing them to undercut their competition. As a result, one brother was convicted to 17 years of prison, while the other fled to Iran.

This is an example of how pricing was reduced, by breaking the law. The result was a loss of faith and trust in the industry and the incarceration of one of the brothers. When pricing a product or service, a company should take into account:
1) The cost of running their business in a legal, ethical manner.
2) Consider the quality of product or service you ...

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