Texas Society of CPAs Speaks Out About Foreign Outsourcing Trends

In a recent letter to Scott Voynich, Chairman of the Board of Directors for the AICPA, the Executive Board of the Texas Society of CPAs has expressed concern over the growing trend of CPAs outsourcing services to foreign countries. You may read and comment on this trend below. AccountingWEB members may add their comments below. Just click on the orange comment button below this article and add your comments and thoughts on this issue.

Letter to the AICPA

November 11, 2003

S. Scott Voynich, CPA
Chairman, Board of Directors
American Institute of CPAs
1211 Avenue of the Americas
New York, N.Y. 10036-8775

Dear Scott,

On behalf of the Executive Board of the Texas Society of CPAs, I am writing to convey to the AICPA our concerns about the growing practice by CPAs of outsourcing services to foreign countries.

Our Board encourages the AICPA to address this issue and to provide guidance to members who wish to engage in this activity, as well as consider if any changes should be made to the Code of Professional Conduct as it relates to this type of practice.

Our Board met recently and had a lively discussion on this subject.

We noted that while larger international CPA firms have been sending various services to their foreign locations for sometime, in recent years even small local firms have started to employ this practice as a means of lowering their costs and meeting their staffing needs. In fact, one member of our Board currently uses this practice in their firm and sends routine services to Mexico for processing.

We also acknowledged that a number of companies are now advertising these types of services to small and mid-sized CPA firms soliciting their business for outsourcing various services to foreign locations.

Our Board recognized some of the positive benefits this type of practice might bring to CPA firms lowering their costs, assisting them in dealing with their staffing and workload issues, and allowing them to expand their capacity. Yet we also had concerns about some potential dangers in this practice such as – the loss of security of client information sent electronically, the privacy of personal and financial information of clients and the potential loss of control of data and information when sent anywhere outside the firm.

Our Board discussed the issue of whether CPAs have an obligation to disclose or make clients aware that their information is being sent and processed in foreign locations and how the profession’s Code of Ethics should apply in this area. We also questioned whether any of the current laws related to privacy (i.e., Gramm Leach - Bliley) might affect this area.

Because this issue is one of national and international scope, we think the AICPA is best positioned to study the matter and provide appropriate guidance to CPAs who wish to employ this practice. Also, the AICPA can investigate and determine if the current Rules of Ethics are adequate to provide protection to the public or if appropriate changes should be considered to better safeguard the public in this area. We think the issue needs immediate attention before this practice becomes even more widespread and before any problem may occur that would have a negative affect on the profession as a whole.

TSCPA is most happy to provide any assistance we can as an organization to AICPA as it addresses this matter. We appreciate your attention to our request and would be happy to answer any questions you may have. Thank you for your consideration.

Thank you for your consideration.

Sincerely,

Nita J. Clyde
Chairman

cc: TSCPA Executive Board
Barry Melancon, President, AICPA

You may read the AICPA's response to this letter.

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Just click on the orange comment button below this article and add your comments and thoughts on this issue.

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