Tonya Latirno is a staff accountant for Cannally andKennedy, a local CPA firm. For the past 10 years, the firmhas given employees a year-end bonus equal to twoweeks' salary. On November 15, the firm's managementteam announced that there would be no annual bonusthis year. Because of the firm's long history of giving ayear-end bonus, Tonya and her coworkers had come toexpect the bonus and believed that Cannally andKennedy had breached an implicit agreement bydiscontinuing the bonus. As a result, Tonya decided thatshe would make up for the lost bonus by working an extrasix hours of overtime per week for the rest of the year.Cannally and Kennedy's policy is to pay overtime at 150%of straight time.Tonya's supervisor was surprised to see overtime beingreported, because there is generally very little additionalor unusual client service demands at the end of thecalendar year. However, the overtime was not questioned,because employees are on the "honor system" inreporting their workIs Cannally and Kennedy acting in an ethicalmanner by eliminating the bonus? Explain youranswer.Is Tonya behaving ethically by making up the bonus withunnecessary overtime? Why or why not?

Ethics: Ethics in business is a much debated yet less followed topic. Every business has to…

Answered: Is Cannally and Kennedy acting in an…

Is Cannally and Kennedy acting in an ethical manner by eliminating the bonus? Explain your answer. Is Tonya behaving ethically by making up the bonus with unnecessary overtime? Why or why not?

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter10: Liabilities: Current, Installment Notes, And Contingencies

Section: Chapter Questions

Problem 1TIF

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Question

Tonya Latirno is a staff accountant for Cannally and
Kennedy, a local CPA firm. For the past 10 years, the firm
has given employees a year-end bonus equal to two
weeks' salary. On November 15, the firm's management
team announced that there would be no annual bonus
this year. Because of the firm's long history of giving a
year-end bonus, Tonya and her coworkers had come to
expect the bonus and believed that Cannally and
Kennedy had breached an implicit agreement by
discontinuing the bonus. As a result, Tonya decided that
she would make up for the lost bonus by working an extra
six hours of overtime per week for the rest of the year.
Cannally and Kennedy's policy is to pay overtime at 150%
of straight time.
Tonya's supervisor was surprised to see overtime being
reported, because there is generally very little additional
or unusual client service demands at the end of the
calendar year. However, the overtime was not questioned,
because employees are on the "honor system" in
reporting their work
Is Cannally and Kennedy acting in an ethical
manner by eliminating the bonus? Explain your
answer.
Is Tonya behaving ethically by making up the bonus with
unnecessary overtime? Why or why not?

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