In 1973, the AICPA published Ethics Ruling No. 1, dealing with outsourcing and the computer processing of client returns. The Institute's professional ethics executive committee just appointed a task force to evaluate whether that ruling needs to be revised.
And in response to numerous inquiries, the AICPA has published guidance on the issues surrounding outsourcing. It takes the form of an article that will appear in the March issue of the Journal of Accountancy.
The article, written by Richard Miller, general counsel and secretary of the AICPA, and Allan Anderson, AICPA senior vice-president of member and public interests, is at www.aicpa.org/download/ethics/outsourcing.pdf. It is entitled, "Legal and Ethical Considerations regarding Outsourcing" and basically delineates the accountant's responsibilities in the following manner: "Primary among them are security and confidentiality of information, due professional care and compliance with the Code of Professional Conduct. In addition, members must monitor security procedures that third-party providers have put into place to ensure they remain effective."
The article is long on legal considerations, but rather short on the ethical ones. The sentence in the article that particularly caught my eye was: "The code does not require members to advise clients regarding their use of a third-party provider. Therefore, advising the client of such use is at the sole discretion of the member unless the client questions the member regarding such practice."
Interestingly, Practical Accountant's March issue deals with outsourcing both in my editor's note and in a sidebar to the cover story "Privacy Please." The major difference is that we mention tax prep return outsourcing to India and the dilemma that accountants are now grappling with in deciding whether they should tell their clients specifically that their return might be outsourced to India.
I would have liked the AICPA to have addressed this ethical dilemma in their guidance. But then again outsourcing of tax returns to India was never specifically mentioned in the guidance.
It is a bit remarkable that in the so-call new age of transparency with respect to financial information, the AICPA's recommendation for disclosure by accountants regarding to outsourcing appears to be "A Kind of Hope They Don't Ask, So You Won't Have to Tell Policy."
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