Pfau, Suzanne-DB4-R1 ACCT 612
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Accounting
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Apr 3, 2024
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In the scenario, Clara seeks assistance from an attorney regarding her husband Phil's estate. A frugal factory worker, Phil amassed a substantial estate valued at approximately $1,500,000 in stocks and bonds. Clara, lacking sophistication in financial matters, agrees to an arrangement where the attorney will handle the estate for 17 percent of its value, significantly higher than the typical 3 to 5 percent fee. Furthermore, the attorney hires CPA Charles for $10,000 to compute Phil's estate tax and prepare the necessary documents.
Circular 230 Responsibility
Under Circular 230, Charles, as a hired CPA by the attorney, may not be directly responsible for informing Clara of the overcharging. However, a conflict of interest arises as Charles is indirectly involved in Clara's affairs by handling estate tax computations. Circular 230's §10.27(a) prohibits charging unconscionable fees, suggesting that Charles should advise Clara about the situation to maintain integrity and avoid ethical implications.
Ethical Issues
The primary ethical concern is Clara being taken advantage of during a vulnerable time. The attorney's decision to charge an exorbitant fee exploits Clara's lack of financial knowledge and amplifies her distress. "Professional ethics is a set of ethical norms, concepts, evaluations and ideals that are characteristic of a particular profession in a given society" (Kamolova, 2022, p. 1). Additionally, Charles faces an ethical dilemma as his involvement in the overcharging compromises his professional integrity and reputation.
AICPA Code of Professional Conduct
Several AICPA rules apply in this situation. Rule 102 emphasizes integrity, obligating professionals to act with honesty and fairness. "The code of ethics establishes the values that are the principles of accounting profession holders in doing accounting activities" (Goklas &
Manurung, 2022, p. 52). Charging excessive fees, as seen in this scenario, contradicts this principle. Moreover, Section 0.300.030 underscores the importance of fostering public trust. By participating in overcharging Clara, both the attorney and Charles risk damaging public confidence in the professional community.
Biblical Principle
In this context, the situation with Clara starkly contradicts these principles, urging individuals associated with it to rectify the injustice. Proverbs 31:8-9 implores, "Speak up for those who cannot speak for themselves, for the rights of all who are destitute. 9 Speak up and judge fairly; defend the rights of the poor and needy" (Bible Gateway, 2015). Additionally, 1 Timothy 5:18 advises, "For Scripture says, "Do not muzzle an ox while it is treading out the grain," [a] and "The worker deserves his wages" (1 Timothy 5:18 NIV - - Bible Gateway, n.d.). These verses underscore the importance of advocating for justice and fair treatment, urging individuals to take action to correct the exploitation experienced by Clara.
Conclusion
The scenario presents a complex ethical dilemma where the attorney's overcharging practices exploit Clara, a vulnerable widow. While Charles may not have a direct obligation under Circular 230, his involvement in the situation raises ethical concerns about integrity and fairness. Adhering to the AICPA Code of Professional Conduct and biblical principles necessitates taking action to rectify the injustice and protect Clara's interests. Acting with integrity, compassion, and fairness is paramount in resolving this ethical dilemma.
References
1 Timothy 5:18 NIV - - Bible Gateway
. (n.d.). Www.biblegateway.com. https://www.biblegateway.com/passage/?search=1+Timothy+5%3A18+&version=NIV
Bible Gateway. (2015).
Bible Gateway passage: Proverbs 31:8-9 - New International Version
. Bible Gateway; BibleGateway. https://www.biblegateway.com/passage/?
search=Proverbs+31%3A8-9&version=NIV
Goklas, A., & Manurung, A. H. (2022). The Importance of the Code of Ethics in Preventing Fraud for the Professional Accountant.
Jurnal Economic Resource
,
5
(1), 51-56.
Kamolova, S. (2022). IMPLEMENTATION OF PEDAGOGICAL ETHICS IN FUTURE TEACHERS.
Журнал Педагогики и психологии в современном образовании
,
2
(2).
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