An Ethical Dilemma
In this article and from time to time in the future, I will discuss common ethical dilemmas that CPAs and other tax practitioners face every day in their practices. This will be done through a case study methodology, which will include a set of facts, a description of the conflicts, the applicable authority and a suggested resolution. Also, keep in mind that in some instances there will be no definitive “right answer” and in those cases it will merely be my own opinion.
The Case of the Newly Minted Valuation Expert
You are a CPA and a member of the MICPA. You register for and attend a workshop at an MICPA conference titled “Business Valuation Basics.” Since your tax, auditing and financial service business has not grown in the last few years, you decide to expand the services you offer to clients. You know you can purchase business valuation software from your present software vendor. You have an old friend who is a Certified Valuation Analyst (CVA) and Accredited in Business Valuations (ABV) and although he works at a “big four” firm, he has agreed to “eyeball” your business valuation reports and is available from time to time to answer a few questions.
You discuss this idea with your marketing advisor. She suggests that you send your existing clients and referral sources a new brochure which provides in part:
- The firm now offers business valuation services
- The business valuation services are offered for such purposes as transaction based, tax based and litigation based needs
- Our experienced, credentialed staff, including CVAs and ABVs, has the knowledge and understanding necessary to meet every client’s business valuation needs
Is there anything wrong with this arrangement and the brochure?
- Does the brochure constitute false advertising?
- Is the statement, “Our experienced, credentialed staff, including CVAs and ABVs . . .” problematic?
- Does the firm/CPA possess sufficient competency or have the requisite qualifications to offer business valuation services?
- Is the arrangement with the “outside” accountant conducive to ensuring that the Code and Circular 230 obligations are met?
Furthermore, Code Paragraphs 0.300.060.02 and .03 and Section 10.35 of Circular 230 require members/tax practitioners to possess sufficient competency to perform the required service for their clients. Again, this would appear to be problematic. Attending an MICPA workshop, buying software and having a real expert “eyeball” reports would likely fall short of the competency standard by any measure.