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This posting addresses the ethics of hiring non-CPAs.

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As a CPA you are in charge of a small tax advisory firm providing services to individul taxpayers, a substantial group of whom is high-wealth. Your firm is experiencing new pressures from the changing marketplace. New, non-CPA market competitors and competition from do-it-yourself tax preparation software packages have had a negative effect on your bottom line. Because of these pressures, you are looking at ways to reduce costs. To expand your business and continue successfully you must consider employing non-CPAs. Explain economic issues that bring concern to pricing your services and products. What ethical challenges will you face in hiring non-CPAs? What standards apply?

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Solution Summary

The solution provides a detailed discussion about the ethics involved in hiring non-CPAs, including all economic issues involved. References are also provided.

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There are several economic issues that must be considered in this scenario. In this case, the majority of the clients are high-wealth clients. The clients are seeking services from trained professionals in a tax advisory firm. Because this is established as a firm with licensed CPA holders, it is likely assumed by the clientele that the professionals with whom they will work and the professionals that will be working on their papers, investments, and so forth are also CPAs or equally licensed professionals including attorneys or attorney-CPAs. The prices that the firm charges to work with a CPA on a certain task are specific.

A typical scenario would be $75 per hour for investment planning with a CPA, where the CPA would discuss the various income tax consequences and ramifications of various investment strategies. If the tax advisory firm has the client, particularly a high-wealth client, meet with a CPA and then turns the client's paperwork over to another associate after the client leaves (which is a common practice), the non-CPA would then be using the billable time for the ...

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