Ethics in Accountancy Case Analysis

1933 Words Jun 19th, 2013 8 Pages
Ethics in Accountancy Case Analysis
Case 2-5: Eating Time

1. Frame the ethical issue: Should Kevin Lowe “eat time” by taking work home and not record the time?
2. Gathering all the facts:
* Kevin Lowe is a new staff accountant at Stooges LLP
* Kevin took 50% longer to complete audit work than his predecessor.
* Stooges LLP is on a fixed budget for these audits.
* Bo Chambers and Moe Chambers are partners supervising Kevin.
* Bo and Mo explicitly say that they do not want Kevin to cut down on the work he does.
* Bo and Mo will not directly tell Kevin to “eat hours”.
* Bo and Mo do explicitly say that it is up to Kevin to decide how to increase his productivity.
* Bo and Mo also imply that
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* Co-workers of Kevin Lowe –
k. Perform their jobs professionally and competently.
l. Honestly report their hours as specified in work rules as staff accountants.
* Clients of Stooges LLC
m. To expect that Stooges LLC will deliver a professional audit for the price that was contracted.
4. Identify the relevant accounting ethics standards involved in the situation:
* Legality: Nothing illegal will be done.
* Professional Standards:
a. By not reporting his proper hours, Kevin will be violating Rule 54. AICPA Standards 54 – Integrity: To maintain and broaden public confidence, members should perform all professional responsibilities with the highest sense of integrity.
b. By not report his proper hours, Kevin will be violating Rule 56.4. AICPA Standards 56.4 – Due Care: Members should be diligent in discharging responsibilities to clients, employers, and the public. Diligence imposes the responsibility to render services promptly and carefully, to be thorough, and to observe applicable technical and ethical standards.
c. Stooges LLC (Bo and Moe) may violate Rule 56.5 by no properly supervising Kevin’s work and then encouraging Kevin to “eat hours”. AICPA Standards 56.5 – Due Care: Due care requires a member to plan and supervise adequately any professional activity for which he or she is responsible.
* In-house Rules:
d. Kevin will be breaking Stooges LLC…