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Economic issues that such a firm experiences in pricing its products and services, as well as the ethical challenges that the
CPA
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Introduction
Today, tax advisory firms have options to employ CPAs or non-CPAs or install ‘do-it-yourself tax-preparation’ software packages. A firm can also decide to mix them. The option that a firm selects has a major impact on its ability to compete with other firms in the targeted market. The paper explores a case of tax firm that that has employed CPAs and is experiencing market pressures due to competition emerging from firms that employ non-CPAs, as well as firms that use the self-service computer software. The paper examines economic issues that such a firm experiences in pricing its products and services, as well as the ethical challenges that the firm is likely to face when hiring non-CPAs.
Economic Issues Related to Pricing
One of those major economic issues that a tax advisory firm employing CPAs is likely to face in pricing is inability to determine the impact that a change in prices will have on the attractiveness of its products and services to the consumers (Poniachek, 2013). Usually, CPAs require higher level of compensation than non-CPAs, implying that the cost of services provided by a firm hiring CPAs is likely to be higher than the cost of a firm that hires non-CPAs. An organization that uses self-service computer software is likely to incur lower costs than a firm that hires CPAs in the long-run. Consequently, a firm employing CPAs is likely to charge higher prices than the other firms in order to cover the higher costs (Poniachek, 2013). Given the high level of competition that such firms face today, increasing competitiveness in the market may require a firm hiring CPAs to consider replacing some of them with non-CPAs. The step can help to reduce costs and to charge competitive prices for a firm’s services and products.
However, the CPAs usually provide higher valuable services than the non-CPAs since they are more knowledgeable and skilled. At the same time, consumers usually attach value of a product or service to its value. Premium services are charged a higher price than less quality services (Poniachek, 2013). As such, consumers may perceive the lower prices of a tax advisory firm as coinciding to lower-quality services and products. Consequently, a firm serving high-wealth consumers may risk losing the customers who value high quality services that attract higher pay. Although the firm may attract other customers who will be attracted to the lower prices, the high level of competition may limit the ability to attract such customers. Also, a tax advisory firm may not be sure that reducing the prices will attract enough customers to enable it increase profits, irrespective of the reduction in total costs. Although the move may affect the value positioning of a tax advisory firm, offering different services and products to different consumer segments at different prices can help to offset the problem (Poniachek, 2013).
Ethical Challenges of Recruiting non-CPAs
Hiring non-CPAs may raise several challenges to a tax advisory firm. One of the major challenges is the fact that the move may require the firm to lay off CPAs. The move is likely to have negative impacts on the welfare of the laid-off workers, especially if they remain jobless. If a laid off worker stays jobless, he/she may not access enough income to cover his/her expenses v. As such, the move ignores the fact that the laid-off employees may suffer due to lack of constant income. Further, terminating the work contract involves overlooking the social contract existing between the employer and the workers (Loke & Shong, 2008). Employees develop a social contract with their employees, which motivate them to work hard to enhance the progress, achievement and performance of a firm. Ethics standards require every part to a work contract to reciprocate appropriately to the efforts of the other. However, termination of the contract ignores the contribution of a worker and it amounts to a failure to fulfill the expectations of a social contract.
Secondly, recruiting the non-CPAs may affect the value of services offered to the clients. In a tax advisor firm, a worker plays a major role in influencing the loyalty and trust of clients to its services and products. As noted earlier, the CPAs are likely to provide higher quality services to clients than non-CPAs due to their higher level of knowledge and skills (Loke & Shong, 2008). In a firm hires CPAs only, the existing clients are likely to have developed trust and loyalty to the organization due to their preference of the value of services offered by the employees. Hiring non-CPAs who may not have ability to deliver the same quality of work is likely to lead to the betrayal of trust and loyalty of the existing clients who would prefer the services of the CPAs. In short, hiring the non-CPAs is likely to violate the ethical standards guiding the contract between an employer and a worker, as well as the relationship between an organization and the clients (Loke & Shong, 2008).
Conclusion
In conclusion, hiring non-CPAs may help to cut down costs of a tax advisory firm. However, the firm may not be able to asses the impact of a new pricing strategy on the loyalty of the existing customers and the profits. In addition to the economic concerns of pricing, the move may lead to the violation of the ethical standards that guide social contract between the employer and employee, as well as the relationship of the organization and customers.
References
Loke, J. & Shong, C. (2008). International Management. Lulu.com
Poniachek, H. A. (2013). International Corporate Finance: Markets, Transactions and Financial
Management. New York, NY: Routledge
Economic Issue of Current Interest
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Economic Issue of Current Interest
Issue of IRS has aroused a heated debate in the political arena thereby dividing the two huge political parties. Some argue that it is a way of punishing the president’s opponents although this has not been proven. The opponents argue that whoever initiated the audit must be politically motivated because it is evident that the audit targeted patriot groups and Tea party organizations. It is interesting for the IRS department to admit that indeed there was a mistake made in the way the issue of influx of tax exempt applications was made initially.
Nevertheless, it is important to note that IRS has been enabled by the law to establish if organizations engage in lawful permissible level of political activity. During the house oversight hearing, the query on whether there was a political criteria involved in the way the issue was handled due to emergence of troubling cases was not well responded to but the Treasury Inspector General promised to respond at a later date.
Republicans feel that there should be a prosecutor who is not loyal to the government of the day to handle the much politicized IRS tax enforcement. Republicans argue that it is not possible for the Attorney General to investigate the administration he is working for. Actually, I also concur with the republicans’ arguments particularly due to the fact that the issue itself is also political. The normal legal process may also take longer period than expected yet the matter is already in the public gallery. Possibly, the IRS tax enforcement issue could have been handled by the congress for quicker outcome. Whatever is important is the exposure of the people behind the selective tax enforcement against conservatives and even why the auditors thought it legitimate to carry out the audit selectively (“No IRS Special Prosecutor” 1).
I believe IRS should be independent in their way of handling cases, leave alone their operations. The selective tax enforcement to a larger extend, has damaged the integrity of such an important body. How then can we trust the institution? Does it mean that the institution only favors the government of the day? I believe the source of this issue should be known to the public as soon as possible. I suppose that congressional committees should dig out the facts and other relevant information even from the executive and failure to release such kind of information may even lead to an impeachment of the president.
Use of special prosecutor may also take time since they are famous for their speed which may extend indictment to another regime but failure of indictment may also be kept secret by the government. It is imperative to note that the special prosecutor may not be able to understand the importance of the matter to the public and address political accountability especially how the case started as well as the pressure behind it (“No IRS Special Prosecutor” 1).
Investigation should include the nature of pressure and the people behind the IRS selective tax system. All Americans must be given equal opportunity regardless of their political affiliations. It is further vital to explore the action of audit particularly on the donors of Republicans campaign especially Mitt Romney’s and other Democrats opponents. The liberty and freedom of people should not be infringed by the government of the day. Use of public resources, privileges and power granted to elected officials to punish the people who are trying to put government in check is undeniably unacceptable. Undoubtedly, whoever may be engaged to investigate the matter such as special prosecutor must be highly scrutinized since the individual may also intend to conceal crucial information thus boosting less political responsibility (“No IRS Special Prosecutor” 1).
Despite blaming the government of the day, it is clear that the U.S tax system need to be simplified since it has given the IRS excess discretion in interpreting and forcing the law. Tax reforms are vital in decreasing the complexity of the tax law although the existence of the opposite forces between Democrats and the Republicans have instilled formidable obstacle as far as the overhaul of the system is concerned. Coming together for the purpose of solving such kind of issues should be given first priority because none of the politicians is sure about their position in the next government.
Probably, the issue of selective tax enforcement would call for complete overhaul of the bureaucratic system such as the tax exempt status. Tax system should be separated from the politics and this is only possible when the complexity of the system is simplified. However, the bureaucracy of the system cannot prompt the IRS to target only specific individuals with specific political affiliations thus evidencing the political influence and partisan. The congress should therefore carry out a serious investigation to detect any criminal behavior with concrete evidence and forward to the Attorney General’s office.
Works Cited
“No IRS Special Prosecutor.” Editorial. Wall Street Journal east. ed. 28 May. 2013: A14. Print.
Economic Impacts Of Tourism
Economic Impacts Of Tourism
Tourism is the movement of people for one place to another and staying in places outside their usual environment for not less than twenty-four hours and not more than one consecutive year for leisure, business, and other purposes. Tourists therefore travel and stay in places and in the process get both the catering and accommodation services that they would have received while at their usual environments. Hospitality industry and tourism industry work hand in hand to ensure that the tourists are well cared for while they are at their proximity (Mak J. 2004)..
The hospitality industry incorporates the catering as well as the accommodation sectors. With the development of the hospitality industry, hotels have been improved. They now provide both catering as well as accommodation services. Tourism is an invisible export and a country with good scenic features is more advantaged because the attractions can lure more tourists into the country thereby increasing the size of her Gross Domestic Product. This is due to the payments they make at the various locations where hospitality services are provided (Mak J. 2004)..
In discussing the Tourism multiplier effects, we look at how the industry encourages the growth of the primary and the secondary sectors of the economy. The multiplier effects leads into a vicious circle. It further talks much of how much the money spent by a tourist circulates in an economy. The hotel therefore is a very crucial facility in the tourism destinations. This is because it generates income both directly and indirectly. With the establishment of the hotels, local businesses in the area supply products to the hotel facility (Mak J. 2004)..
These are used in the provision of services to the tourists who come to spend in the hotels. It thus forces the suppliers of the tourism products to therefore set-up their facilities closer to the hotels to ensure a regular supply and to avoid deficiency. This at the same time attracts other companies into the area to facilitate continuous flow in service provision. They are set up due to the interdisciplinary nature of the tourism industry. Security of the tourists is another important aspect but not just the money they spend. A hotel that cares for its customers is therefore visited frequently by the tourists making it to have booming sales .This is because the tourists are assured of their security (Mak J. 2004)..
After various entrepreneurs had seen this kind of impacts of tourism, they then decided to expand their hotels so that they maximize on the tourists spending at their hotels. They expanded their businesses and provided quality services to the clients. Quality service provision can as well be an attraction to the tourists so that they make another visit with an anticipation of receiving the same service. This therefore makes such hotels to generate more income directly to them and indirectly to other countries especially those that have their hotels situated at the various tourist destinations (Mak J. 2004)..
Another important aspect that should be put into writing is that some hotels also employ well trained and qualified who can handle different kinds of people. Tourism industry and hospitality industry are service industries that have a direct interaction between the customer and the service provider. It is therefore ideal and in order to have such kind of staff or employees so that the hotel keeps on making sales thereby generating income. Some hotels have customer care and personnel department that handles all the problems that affects the welfare of the tourists or the staff. This in effect has a greater impact on the sales of the hotel (Mak J. 2004)..
The hotel contributes directly, indirectly, and induced employment to the citizens. In its direct employment creation to the citizens, many are employed to help in various sectors within the hotel. The hotel has the front office staff, the accountant, the management staff, the employees working on the catering department, the ones who clean the hotel itself and the compound. These individuals earn income from this and the money is again spent in various sectors related to the hotel. The hotel and the tourism industries require security personnel to cater for the welfare and lives of the citizens. They therefore create employment to these individuals who provide security (Mak J. 2004)..
The hotel industry is again creating employment indirectly to the citizens. This is so because of the interdisciplinary nature of the industry. A good hotel has to be accessible. Accessibility is facilitated by well-developed road networks. During the construction of the road, there is casual employment to the locals when the construction company comes. With the roads being available, other sectors mainly, the transport industry must come in to provide vehicles to enhance movement of tourists in and out of the hotel. Still on the indirect form of the employment creation by the hotels, the drivers and even the cyclists who assists the tourism and hotel industries in commutation (Mak J. 2004)..
The hotel again induces employment to the people. This is can be seen in areas where other peripheral services are providers have come in to back up the hotel industry in areas where the hotel is located at a tourist destination far away from urban areas. Such auxiliary service providers are the insurance companies, banking, and entertainment or amusement companies. All these are service industries that require direct interaction between the customer and the service provider. This therefore means that there must be people employed in these sectors. They get an induced form of employment because of the tourism and hotel industries (Mak J. 2004)..
Another economic impact of tourism is on the infrastructural development in the country. Infrastructure is a very broad grouping and engulfs many social amenities, ranging from hospitals, transport, as well as communication networks. A major tourist destination that has the suitable hotels in question has better infrastructural facilities. This does not just benefit the tourists alone but also the locals and the economy at large (Mak J. 2004)..
Tourism industry improves the interrelationships among the stated among the locals and the foreigners and among the states too. Good interaction between the parties involved promotes the trade between the countries if incase it was there initially and can initiate some form of exchange if need be. To the local market, presence of tourists boosts their sales since. This earning circulates and is used in economy when the locals purchase among themselves. Tourism industry thereby shows much of the vicious circle (Mak J. 2004)..
Negative economic impacts of tourism
In as much as tourism provides income and creates employment, it has negative economic impacts to the countries affected. The negative economic impacts are discussed in depth below;
Leakages
The direct income that an area earns from a tourist visit is the amount of tourist expenditure that remains locally. This is only determined after taxes have been deducted and paid, profits, and wages are paid outside the area. In most all-inclusive package tours, about 80% of tourists’ expenditures go to the airlines, hotels and other international companies. These companies in many cases have their headquarters at the travellers’ original countries, they are foreign owned and not locally owned. The money therefore does not benefit the locals. This is export leakage, thus a withdrawal reducing the G.D.P of the tourist destination. The money also leaves the country through import leakage. This in many cases occurs when tourists want standards of facilities and equipment that are not in the tourist destination forcing the country to purchase or hire (Mak J. 2004)..
Increase in prices
During the peak, period when tourists flock into the major tourist destinations, the locals suffer. This is due to the prices that are hiked by the traders who at such times want to maximize on profits. The locals therefore find the prices of basic essentials to be exorbitant. As a result they fail to buy the necessities and they do they must dig deep into their pockets to survive. This is so because the income of the locals does not increase proportionately to match the rapid inflation. Tourism development can lead to foreign dominance in the developing countries and even eradicate and erode the prevailing activities (Mak J. 2004)..
This could be so because of the increase in the cost of building and real estates that make it difficult for the locals to meet their daily basic needs. Foreign dominance in a country finally leads to leakages because of the repatriation that is always associated with It (Mak J. 2004).
References
Mak J. ( 2004), Tourism and the Economy: Understanding the Economics of Tourism of Hawaii Press, Amazon.com