Free File of 2008 Tax Return with IRS

I found out from my accounting class that IRS now offers Free File service, so people no longer need to buy a tax software to file their taxes electronically.

The link is to Free File is: http://www.irs.gov/efile/article/0,,id=118986,00.html

According to the announcement, IRS partnered with Free File Alliance, LLC to offer this service to the general public. You can fill out your 1040, 1040A, 1040EZ online and it will do the calculation for you. The best thing of all is: it is all free.

So the money saved on buying TurboTax or TaxCut can go toward your savings account. What a great deal in the slow economy!

KPMG - Another Big Four CPA Firm Not Doing Their Job

This week I did a search on the civil litigation on KPMG.

KPMG is one of the Big Four auditing firm. In July of 2008, KPMG was ordered by a New Jersey Superior Court judge to stand trial in an accounting fraud lawsuit. The case was Case Art Industries, LLP v. KPMG, LLP.

KPMG was alleged to repeatedly made material misstatements on its audit reports for its client, Papel Giftware, Inc. As a result, Case Art later acquired Papel and suffered damages close to $50 million.

KPMG was ordered to pay $31.8 million to Cast Art after the jury trial in October 2008. The mistake KPMG made in this case was that its auditors failed to detect a massive fraud that should have been detected if they were doing their jobs professionally. On the accounting records, Papel was shipping the same products to the phony customers two to three times to inflate the revenue.

It is surprising to see that even a Big Four company like KPMG would so recklessly perform their audit work. The negligence on its part ends up hurting other businesses and their investors. This case also shows that when there is a conflict of interest in the audit work, auditors tend to lose their independence and integrity. It is an important area that all CPAs should understand how much their work can influence other people's life.

Thoughts on "Healthy Hannah" Case

Healthy Hannah is a case that I read in my Accounting Ethics class.

The story goes like this:

Hannah is a healthy 23 year-old woman who visits a hospital emergency room with
severe head injury. The doctors determine that they can treat Hannah and she will
fully recover in a few months. the cost of treating her will be about $250,000.
However, for a smaller cost of about $100,000 the doctors would let Hannah die
in the hospital and then harvest her vital organs to benefit many other people.
While the loss of Hannah would be tragic, many other lives could be saved with the
organ donations.

In this case, she has a high chance of recovering, except that the medical bill would be high. However, the true ethics should not be on a scale of how much it would cost. If we look at it from the principle of Kantian principle of "Practical Superlative", people should be treated as "an end-in-itself and never as a means". Even though Hannah's death can benefit more people, it is morally wrong to disrespect her rights of living.

As a reminder to myself, I should not look at things merely from the Principle of Utility--choosing an action that creates the greatest happiness or utility. Even if the chance of Hannah's survival is slim, the doctors should still give her treatment. However, in reality, doctors do have to consider who will pick up the medical bills. It is morally unethical, but that is how hospitals run their businesses.