1. List the key personal traits an office managing partner (OMP) should possess. List those traits in descending order of importance. Be prepared to defend your choices. Would the list you developed apply equally well to an audit partner? If not, point out how the personal traits an OMP should possess differ from those that should be possessed by an audit partner.

2. A fundamental ethical principle in the AICPA Code of Professional Conduct is integrity. Did Tillman Rollins act with integrity in his treatment of Eugene Smith? Defend your answer.

3. Would you want to work in a practice office in which Tillman Rollins is the OMP? Explain.

4. After Rollins made the decision to hire Eugene Smith, what measures could Rollins, White Eagle, and Martin have taken to enhance Smiths chances of being successful with the given firm?

CASE 6.8 Tillman Rollins, Office Managing Partner 8:00 p.m., Saturday, December 11 "So, any good news on the staffing front, Till?" Sophie White Eagle asked in between bites of a Christmas cookie. 1 "Nope. Still short at least one staff accountant," Tillman Rollins replied glumly before adding, "probably two." Tillman Rollins and his wife were hosting the annual Christmas party for the Big Four practice office for which he served as the managing partner. In the waning minutes of the party, Rollins had called an impromptu meeting of the audit staff's recruiting committee. That committee consisted of Rollins, Sophie White Eagle, an audit manager, and Jerry Martin, a "heavy" audit senior. "Any chance of borrowing more audit staff from other offices?" Martin asked. "None," Rollins grumbled. "Everyone's tapped out. We were incredibly lucky to pick up the senior and staff accountant from the Denver office. If Walter Alcorn, the OMP there, hadn't owed me a big favor, we wouldn't have gotten those guys." The practice office overseen by Tillman Rollins was among the smallest of the several hundred Big Four offices scattered coast-to-coast across the continental United States. Located in a remote metropolitan area in the Mountain Time Zone, the office's professional staff consisted of approximately 40 individuals, two-thirds of whom were auditors. The 57-year-old Rollins doubled as the office managing partner (OMP) and director of the audit practice. His two fellow partners included a young audit partner who had recently transferred from the firm's Dallas office and a tax partner who was nearing retirement. Managing the size of his office's audit staff posed a recurring and vexing problem for Rollins. Each year, unforeseen circumstances impacted the ideal size of that staff. In early October, Rollins' office unexpectedly picked up a local bank as an audit client. Then, in late November, the office's largest audit client, Harsha Manufacturing, requested an "acquisition audit" of a local company it intended to purchase-the client insisted that the one-time acquisition audit be completed by March 15, meaning that it would overlap with the office's busy season. The two new engagements had caused Rollins to scramble to staff his office's year-end audits. Unfortunately, he came up short, which was forcing White Eagle, Martin, and their fellow auditors to work excessive overtime. Rollins knew the manpower shortage would result in even larger amounts of overtime for his subordinates when the heart of the busy season arrived in a few weeks and that concerned him greatly. Tillman Rollins didn't fit the prototype of a Big Four OMP. Despite his seemingly gruff personality that was magnified by his large frame and weather-beaten facehe was the only partner in his firm who owned a working ranch-Rollins was much more paternalistic and approachable than his typical "big city" counterpart. SECTION SIX Professional Roles Since being appointed OMP 10 years earlier, he had committed himself to developing close relationships with his subordinates. Remaining in the position he now occupied for the final few years of his career ranked as Rollins' primary professional goal-he and his wife spent most weekends at their ranch that was located 70 miles from his practice office. Rollins realized if he were replaced as the OMP, he almost certainly would have to transfer to another office hundreds of miles away. He was also well aware that two key metrics that the national headquarters office considered in assessing the annual performance of OMPs was the profitability of the given office and the overall morale of its professional staff. Unfortunately, maximizing those two metrics were often conflicting goals. Excessive overtime increased his office's profitability, for example, while, at the same time, diminishing the goodwill with his subordinates that he had worked so hard to cultivate. "Well, I guess we could try to cherry-pick a couple of auditors from Boone and Suderman or Taylor and Fluharty," Jerry Martin suggested. "Of course, that will make for some tense encounters at the next few meetings of the local chapter of the state society," he added with a chuckle. None of the other Big Four firms had a practice office within 250 miles of Rollins' office. Its principal competitors were two local CPA firms, each of which had 20 to 30 professionals on staff, the majority of whom were tax specialists. "Believe me, I have already considered that option," Rollins responded. "In fact, earlier today, I forced myself to check out the rosters of those firms. But I just don't feel good about cold-calling any of those guys or gals at this point. I know how I would feel if someone tried to hire away one of our staff just as busy season was getting underway." Rollins finished his cup of apple cider. "Yesterday, I did receive a letter and resume from a young man who just graduated at mid-term from Warren State. I called him and invited him in for an interview on Monday morning." Rollins paused as he referred to his iPhone. "His name is Eugene Smith. I would like the two of you to take him to lunch and then give me your feedback by the end of the day. Plan on dropping by my office at five p.m. so we can discuss him." Rollins' office recruited entry-level tax and audit staff primarily from the state's flagship university and from a nearby private university in a neighboring state. Warren State was one of four colleges that were a part of the state's higher education system. Similar to the other three state colleges, Warren State had originally been organized as a "teachers" college. The state legislature had gradually extended the curricula of the four colleges to include majors in other disciplines. Because of the small number of accounting graduates each year from Warren State and the other state college that offered an accounting degree, Rollins' office did not recruit at those schools. But his office routinely considered graduates from the two schools who inquired regarding employment opportunities. In fact, approximately 20 percent of the office's professional staff were graduates of those two schools. 5:00 p.m., Monday, December 13 "Well, what did you think?" Tillman Rollins addressed the question to Sophie White Eagle and Jerry Martin as they sat down in the two chairs facing his enormous western-style desk made of ponderosa pine. Rollins' two subordinates glanced sideways at each other. Each hoped the other would take the initiative in responding to the audit partner's question. After an awkward pause, White Eagle replied. "Personally, I wasn't impressed. I mean, he is a nice kid, well-mannered and all, but, you know ... he obviously has certain limitations." CASE 6.8 Tlllman Rollins, Office Managing Partner "You saw his resume, right?" Rollins picked up a sheet of paper from his desktop and began scanning it. "The kid had a three-point-six overall GPA and a three-pointeight in his accounting classes. Plus, except for a couple of small scholarships, he paid his way through college by working twenty to thirty hours per week and fulltime in the summer months. What's not to like about that?" "Till, I saw his resume and I'm sure that Jerry and I got the same background information from him that you got. It's just that ..." "It's just what?" Rollins asked pointedly. When White Eagle rolled her eyes and looked away, Martin addressed Rollins. "Uh, Till, I think Sophie and I are on the same page here." Martin glanced at White Eagle before continuing. "We discussed Eugene for a few minutes after lunch and basically reached the same conclusion." Martin nervously rubbed the palms of his hands together. "We just don't think that Eugene is cut out for . . for our office." "Why the hell not?" Rollins barked. "Come on, Till," a flummoxed White Eagle interceded. "Surely you don't think this kid has the potential to succeed as a Big Four auditor?" After a brief pause, she added. "The kid is backward! He's ... he's . . . right off the farm. Didn't you notice that he was wearing white athletic socks? To an interview? And that suit. Nothing against WalMart, but ..." "Wow, so now we are only hiring runway models and charm school graduates?" "No, of course not, Till." Because of her good relationship with Rollins, White Eagle did not hesitate to challenge him when she disagreed with positions he was taking. "But let's face it. The issue here is not whether this kid can hack it on some grunt assignment-" "Hey, like I've said before, I don't like that term," Rollins interrupted White Eagle in mid-sentence. "Sounds offensive." White Eagle, who was not offended at all by Rollins' rebuff, shook her head as she laughed aloud. "Till, don't get all holier-than-thou with me. We are talking about hiring this kid, not writing a code of social etiquette for the office." Rollins briefly cracked a smile at White Eagle's comeback. "Okay, okay. It's obvious that the kid is not ... is not ... polished, shall we say." The pretentiousness that had been present in Rollins' voice was now gone, replaced by a tone of weary exasperation. "But, at this point, if someone has a pulse, I think we should hire him. If we don't, you know what that means? More overtime for everyone, including the two of you." Rollins emphasized his final point by briefly waggling his right index finger in the direction of the audit manager and audit senior. White Eagle nodded her head as she grimaced. She appreciated the fact that Rollins was being so candid with her and Martin. She also realized that most OMPs would not be having such a spirited and even-handed conversation with two subordinates. Most partners in Rollins' position would have simply gone ahead and hired Smith without consulting either of them. "Sophie, I am not asking if he has the potential to succeed with our firm or any other Big Four firm for that matter. What I am asking is whether he can 'hack it,' as you said, on some low-level assignments. I know, for example, that there's a lot of clerical tests and tedious ticking and tying on the Harsha job. You could find some cubicle at the client's office and stick him there to do that stuff for ten or twelve hours a day. Someone has to do it." White Eagle served as the audit manager and Martin as the supervising audit senior on the Harsha Manufacturing audit. "I understand that we are desperate," White Eagle replied in a conciliatory tone. "But I think you are missing a key point that we are trying to make. Jerry and I don't SECTION SIX PROFESSIONAL Roles believe that it would be fair to Eugene for us to hire him just because we are shorthanded. If we do that, we are setting him up for failure." Rollins leaned forward in his chair and fixed his gaze intently on White Eagle. "Number one, Sophie, we would be giving him a chance to prove he belongs in the Big Four world. Number two, at a minimum, his resume for the rest of his life would reflect the fact he once worked for one of the world's leading accounting firms. Those are two solid reasons to extend him an offer, right?" The tone of Rollins' voice suggested that even he doubted the logic of his argument. White Eagle arched her eyebrows as she responded with an indifferent "whatever" while Martin avoided Rollins' gaze by staring at the huge stuffed elk head mounted on the wall behind the partner's desk. "Whatever'? That's it? Thanks a lot for your input." The partner's sarcastic comments prompted the feisty and fiery White Eagle to respond in kind. "Number one, do you plan to give him more than one busy season to prove that he belongs in the Big Four world? Because it is going to take a long time for this kid to overcome twenty-three years of living off the grid. And, number two, if you fire him after one busy season or one year, then he will have to explain that smudge on his resume for the rest of his working life." Rollins began to respond to White Eagle but then decided not to. Instead, he stood and placed his hands on his hips. "Well, for your information, I offered Mr. Smith a job after he had lunch with the two of you. And . . . he immediately accepted." Rollins began shuffling a stack of papers that had been lying on the corner of his desk, his way of signaling that the meeting was adjourned. "I have assigned him to the Harsha job, which means the two of you will be getting much better acquainted with him over the coming months." 3:30 p.m., Thursday, April 29 Sophie White Eagle, Jerry Martin, and the other audit staff members survived the long busy season. The audit senior and staff accountant borrowed from the firm's Denver office did most of the work on the acquisition audit requested by Harsha Manufacturing but White Eagle and Martin spent considerable time assisting them on the engagement. That time ballooned the two auditors' total chargeable hours for the busy season to an unreasonable level. As the acquisition audit was nearing completion in early March, a competitor of Harsha unexpectedly purchased the company that was the subject of the acquisition audit. Rollins had hoped Harsha would be successful in acquiring the company because the consolidated entity would have required a larger audit team to service it. The increased scope of that audit would have helped replace a future loss in chargeable hours Rollins' office would suffer. In early April, the owners of Chandler \& Hayden, the office's second largest audit client, announced they would be moving the company's headquarters to a sunbelt state. The loss of that audit client distressed Rollins. Rather than being understaffed, the office's audit practice suddenly became overstaffed. Even more troubling to Rollins was the prospect of carrying the "dead weight" on the audit staff through the slow summer season when there were insufficient chargeable hours to keep everyone busy even under normal staffing conditions. During the final week of April, Rollins asked White Eagle and Martin to stop by his office. He had two issues to raise with them; one of which was pleasant, the other, not so much. "First of all, I want to apologize again for the ridiculous amount of overtime that you two were forced to work this past busy season. But an apology is not sufficient. CASE 6.8 Tillman Rollins, Office Managing Partner So, I am granting each of you two weeks of comp time that you can take over the summer, subject, of course, to any client needs or constraints." "Thanks," White Eagle and Martin said in unison. "Second, I want to give the two of you a quick update on staffing issues. Later this summer, I will schedule a meeting to discuss our recruiting plans for this fall." Rollins cleared his throat and squirmed uncomfortably in his chair. "The loss of Chandler and Hayden caused us to flip flop. We went from being understaffed to immediately being overstaffed. Being overstaffed is particularly dysfunctional heading into the summer months when chargeable hours are relatively scarce." White Eagle anticipated what was coming next. "Anyway, I thought I should personally inform you that I have decided to counsel Eugene Smith out of the firm. I am hoping that is the only cut I have to make." Rollins fidgeted nervously with his tie. "I have heard that Kaleigh White is thinking of resigning. If she does, then we should be essentially right-sized heading into the summer months." Rollins paused as he gauged the reaction of his two subordinates to his decision to dismiss Eugene Smith. Martin reacted by focusing his attention on Rollins' stuffed elk head, while White Eagle sat motionless, glaring at the partner. After clearing his throat again, Rollins resumed. "I read the performance appraisal for Eugene on the Harsha audit. I understand he was a diligent worker, never complained about the excessive overtime he had to work, and was more than pleasant with his co-workers and client personnel. But I have decided the two of you were correct in the first place. Eugene just isn't cut out for the Big Four world. He belongs somewhere else." The more Rollins spoke, the angrier White Eagle became. Over the past four months, she had come to respect and like Eugene Smith. She had been opposed to hiring him; but once he was hired, she thought he deserved to be given a fair chance to succeed with the firm. In her opinion, Rollins had not done that. As the tension deepened in the room, Martin committed himself to saying as little as possible. He didn't want to be dragged into an ugly confrontation between an audit partner and audit manager that might lower his chances of being promoted to manager himself in coming months. "Sophie, if looks could kill, I would be deader than a piece of driftwood," Rollins joked in an effort to lighten the tense mood. "Well, I am disappointed," White Eagle finally replied to Rollins before adding, "very disappointed." "Okay then. Here's your chance to mow me down. Go ahead and give me both barrels," Rollins continued to jest. Instead of responding to the partner's flippant remarks, White Eagle lowered her gaze to the floor. She was afraid to say anything out of concern that she would regret it later. Because he realized that his lighthearted comments had made things worse, Rollins reverted to a serious demeanor. "It probably won't make you feel any better about my decision, but I have authorized Eugene to receive two weeks of severance pay and a full week of vacation pay." Rollins was right; White Eagle was unmoved by the token gesture. After an extended silence, Rollins leaned forward in his office chair and focused his attention exclusively on White Eagle. "Sophie, if we carry this kid through the summer, he will bring down the office's utilization rate. That's not good for any of us." "Especially you," White Eagle snapped. As soon as the words left her mouth, she regretted having spoken them. For 30 seconds or longer, the three auditors sat in complete silence. Martin was so stressed that he was afraid to breathe. "Well, I'm sorry you feel that way." The tone of Rollins' voice revealed he was deeply hurt by White Eagle's statement. "Maybe that's true. But I have to consider the greater good. I did what I had to do. Both when I hired the kid and when I fired him. That's why they pay me to sit in this chair." One month after the meeting in Tillman Rollins' office, Sophie White Eagle resigned her position with the firm. She and her husband had jointly decided to spend the early summer exploring job opportunities in his native southern California. On July 1, Jerry Martin received the promotion to audit manager he had been anxiously awaiting. The following busy season he replaced Sophie White Eagle as the audit manager on the Harsha Manufacturing engagement team. Questions 1. List the key personal traits an office managing partner (OMP) should possess. List those traits in descending order of importance. Be prepared to defend your choices. Would the list you developed apply equally well to an audit partner? If not, point out how the personal traits an OMP should possess differ from those that should be possessed by an audit partner. 2. A fundamental ethical principle in the AICPA Code of Professional Conduct is "integrity." Did Tillman Rollins act with integrity in his treatment of Eugene Smith? Defend your answer. 3. Would you want to work in a practice office in which Tillman Rollins is the OMP? Explain. 4. After Rollins made the decision to hire Eugene Smith, what measures could Rollins, White Eagle, and Martin have taken to enhance Smith's chances of being successful with the given firm