I had been told that three-time Pulitzer Prize winner Thomas L. Friedman had a way of boring his readers. I was surprised then when I was immediately captivated with his national bestseller, The World is Flat: A Brief History of the Twenty-First Century. Just barely into the first chapter Mr. Friedman discussed my industry: accounting.
Can accounting really be captivating? Mr. Friedman's experiences intrigued me because he discovered that with simplification, tax-return preparation could be outsourced. Outsourcing is not a new concept to the accounting profession. For years accountants have hired interns and temporary help for the months of January through April. Before software for desktop computers, efficient accountants were forced to have their tax returns processed by the software developer. What is new to the profession is the outsourcing of tax returns to foreign countries.
Mr. Friedman was told that outsourcing is justifiable because with the grunt work being done efficiently far away, the accountant will now have quality time to discuss the management of his or her clients' financial affairs.
My first skeptical question if I were a client is, "Have you not already given my account the proper management?" Next, I would ask, "Are you telling me that in a short time span foreign countries are better able to handle the seasonality of your profession than you are?" and "With the cost savings, will I see a reduction in my bill?" Lastly, "If there is no shame in your actions, why are you unwilling to disclose these activities prior to 2006?" (Beginning in 2006, the American Institute of Certified Public Accountants (AICPA) requires disclosure by CPAs to clients of outsourced production.)
I would ask these questions because I already know the answers. I worked at an organization that outsourced tax-return preparation to a company located in India. During the process of setting up the foreign outsourcing I repeatedly encouraged the owners of the CPA firm to disclose to their clients that they were outsourcing to India. I have always believed that you should disclose, disclose, disclose, when working with clients.
However, I was an unwelcome voice. The truth of the matter was that the returns were being outsourced at a cost of $100 each. The client could be charged anywhere from $500 to $2,000 for the outsourced work. The different spins that can (and will) be placed on the rationale for foreign outsourcing is endless. The truth is the outsourcing accountant wants to increase profits. Everybody wants to increase their financial security. The difference is that honest people admit it.
Does your accountant outsource your income tax return to India? When you look at the bottom of your tax return do not expect to see a sticker indicating "Made in India." Even with the AICPA's new standards, you may not be told. Accounting firms have invested in foreign entities so that the accountant may legitimately exclaim that your return is prepared by firm employees.
During the past few years, the accounting industry has been recuperating from diminished public perception due to high-profile scandals. Professional associations of certified public accountants have been actively promoting the high standards exhibited by the majority of the profession. At such a tumultuous time within the accounting industry, I am confused as to why accounting firms are choosing to keep secrets from their clients. Outsourcing firms have generally waited to be told by the boards establishing standards that disclosure would be the obvious ethical approach.
I am not condoning or condemning the outsourcing of income-tax-return preparation. I am simply advocating open and honest relationships between the individuals who hire professionals and the accountants who have been entrusted with confidential personal financial information. If outsourcing is an important concern to you, exercise your right to know. Ask your accountant "Is my personal financial data being transmitted electronically to another country?" "How long have you been doing this?" and "When were you going to tell me?"
Can accounting really be captivating? Mr. Friedman's experiences intrigued me because he discovered that with simplification, tax-return preparation could be outsourced. Outsourcing is not a new concept to the accounting profession. For years accountants have hired interns and temporary help for the months of January through April. Before software for desktop computers, efficient accountants were forced to have their tax returns processed by the software developer. What is new to the profession is the outsourcing of tax returns to foreign countries.
Mr. Friedman was told that outsourcing is justifiable because with the grunt work being done efficiently far away, the accountant will now have quality time to discuss the management of his or her clients' financial affairs.
My first skeptical question if I were a client is, "Have you not already given my account the proper management?" Next, I would ask, "Are you telling me that in a short time span foreign countries are better able to handle the seasonality of your profession than you are?" and "With the cost savings, will I see a reduction in my bill?" Lastly, "If there is no shame in your actions, why are you unwilling to disclose these activities prior to 2006?" (Beginning in 2006, the American Institute of Certified Public Accountants (AICPA) requires disclosure by CPAs to clients of outsourced production.)
I would ask these questions because I already know the answers. I worked at an organization that outsourced tax-return preparation to a company located in India. During the process of setting up the foreign outsourcing I repeatedly encouraged the owners of the CPA firm to disclose to their clients that they were outsourcing to India. I have always believed that you should disclose, disclose, disclose, when working with clients.
However, I was an unwelcome voice. The truth of the matter was that the returns were being outsourced at a cost of $100 each. The client could be charged anywhere from $500 to $2,000 for the outsourced work. The different spins that can (and will) be placed on the rationale for foreign outsourcing is endless. The truth is the outsourcing accountant wants to increase profits. Everybody wants to increase their financial security. The difference is that honest people admit it.
Does your accountant outsource your income tax return to India? When you look at the bottom of your tax return do not expect to see a sticker indicating "Made in India." Even with the AICPA's new standards, you may not be told. Accounting firms have invested in foreign entities so that the accountant may legitimately exclaim that your return is prepared by firm employees.
During the past few years, the accounting industry has been recuperating from diminished public perception due to high-profile scandals. Professional associations of certified public accountants have been actively promoting the high standards exhibited by the majority of the profession. At such a tumultuous time within the accounting industry, I am confused as to why accounting firms are choosing to keep secrets from their clients. Outsourcing firms have generally waited to be told by the boards establishing standards that disclosure would be the obvious ethical approach.
I am not condoning or condemning the outsourcing of income-tax-return preparation. I am simply advocating open and honest relationships between the individuals who hire professionals and the accountants who have been entrusted with confidential personal financial information. If outsourcing is an important concern to you, exercise your right to know. Ask your accountant "Is my personal financial data being transmitted electronically to another country?" "How long have you been doing this?" and "When were you going to tell me?"
1 comment:
Nice post...
Regards,
tax processing outsourcing
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