Question

How much to charge? 
 CASE SYNOPSIS Many professionals are unaware of the ethical dimensions which often underlie routine decisions. To develop a proper moral compass, professionals must develop an ethical sensitivity so that ethical concerns are properly considered in decision-making. Ethical awareness will serve a professional well by allowing the professional to recognize and meet ethical obligations which might not always be initially obvious. Sally Thompson, a young CPA who has just started her own accounting practice, contends with a routine decision. As Sally considers her options, she must consider her responsibilities to her clients and her profession while making a decision which affects her firm's success. As these ethical responsibilities are considered, a relatively straightforward decision becomes much more complicated. CASE BODY History of Thompson Accounting Upon graduating from State University with a degree in accounting, Sally Thompson worked for a few years with a large, regional accounting firm. During that time, Sally had become a CPA and a member of the American Institute of Certified Public Accountants. In her fifth year with the firm, she decided that she would like to return home and work for herself and start her own public accounting practice. Her simmering interest in such a move had been piqued by something her father had told her during a recent visit. One of her father's friends, who had once worked with the IRS, had developed a nice tax practice to supplement his retirement income. The friend no longer felt that he needed the supplementary income and wished to pursue other activities. He would be willing to sell the practice to Sally for a very reasonable price. The more Sally had thought about this possibility the more she liked it. Because the tax practice involved almost exclusively tax preparation, the income was very seasonal. However, Sally had accumulated some savings and was confident that she could support herself in the next couple of years as she developed the tax practice into a full-service CPA firm. Sally already knew of a couple of companies for whom she could perform write-up services, a couple of nonprofit entities for whom she could do audits, and she was confident that she could drum up some other business using the contacts she has in her hometown. Combining the fees from these services, along with the existing tax practice fees, and a reasonable drawdown of her savings, Sally was pretty sure that she could make the monthly payment on the acquisition of the tax practice, pay the salaries of a receptionist/secretary and a full-time bookkeeper, and meet the other operating expenses while still having enough money to live on. On December 1, 2012, Sally signed a contract to purchase the tax practice and signed a lease on office space. On December 5, 2012, Sally Thompson hung out her shingle and opened the doors to Thompson Accounting. They Didn't Teach Us This in School Sally quickly learned that there are lots of challenges to managing your own professional accounting firm. Things that Sally had taken for granted in the regional accounting firm now required her to make a decision. Every major decision had to be made by her with no one else to whom she could defer. Sally had wanted to be her own boss but she is not so sure now. It seems every day that her attention is so divided that it is hard to find time to perform work for which she can bill her clients. She is putting in long hours, getting home late but not able to bill more than about four to six hours per day. She is quickly realizing that tax season is harder as the boss than as an employee. In early March, John Staggs came in with his tax return information. John is a new client who did not have his return done by the predecessor tax practice but by anther preparer across town. John selected Sally's firm because it was conveniently located near John's primary business interest. This year, John has a very complicated tax issue. In the initial interview with John, Sally explained that the issue is a difficult one which will require research to resolve the issues. John is a little hesitant but agrees to engage Sally's services at her normal $250 per hour fee for research and $150 per hour for other tax preparation services. As Sally performs the research on John's tax issue, she believes that this is such an unusual situation that she is not likely to ever see it again. After 21 hours of research, Sally has her resolution and spends five more hours actually preparing John's return. Her final bill for services is $6,000 which John pays on March 15. To Sally, this return was a godsend. She needs the money to make her monthly payments for rent (both for her practice and her own apartment) as well as her firm's payroll for her two employees. Sally has been alarmed at how fast her savings have been used and she is pleased that she would not have to make another withdrawal. Sally is also pleased to acquire a client such as John. While doing his return, she learns that John has several business interests which could be potential new sources of clients as well as being very involved in the several not-for-profit organizations. On March 20, another new client comes to Sally's firm. Much to her surprise, this new client, Joy Wilkins, has the same tax issue as John Staggs. Sally had never expected to see that issue again. Thinking that maybe John Staggs had referred Joy to Sally's firm because of her previous work on a similar tax problem, she asked Joy if John had referred her to Sally's practice. Joy told her that she is a long-time friend of John and that they work together on several civil events during the year, however, she was unaware until now that he was a client of Sally's. Sally did not share with Joy that John had the same tax issue and therefore, Sally does not know whether Joy is aware the John has the same tax issue. Because Sally had already dealt with the difficult tax issue with John's return, she only needed to do an hour of tax research for Joy's return. Joy's return was almost identical to John's and also took five hours of additional preparation time. On March 22, Sally is finished with Joy's tax return and is ready to call Joy and tell her. Sally is stopped by a sudden thought, "How much should I charge Joy?"

Answer 1

As she needs to expand here business so for that she needs more client. As both Joy and John Staggs are friend they will ultimately share the experience on working with her . If Joy will know that inspite of knowing that she can work the same thing quicky but he was charged more. So her reputation will be ruined , so she should charge only $3000 as a goodwill gesture.