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Case 1-7 Eating Time Kevin Lowe is depressed. He has been with the CPA firm Stooges LLP for only three months. Yet the partners in

Case 1-7

Eating Time

Kevin Lowe is depressed. He has been with the CPA firm Stooges LLP for only three months. Yet the partners in charge of the firmBo Chambers and his brother Moe Chambershave asked for a sit-down. Heres how it goes:

Kevin, we asked to see you because your time reports indicate that it takes you 50 percent longer to complete audit work than your predecessor, Moe said.

Well, Bo and Moe, I am new and still learning on the job, replied Lowe.

Thats true, Bo responded, but you have to appreciate that we have fixed budgets for these audits. Every hour over the budgeted time costs us money. While we can handle it in the short run, we will have to bill the clients whose audit you work on a larger fee in the future. We dont want to lose clients as a result.

Are you asking me to cut down on the work I do? Lowe asked.

We would never compromise the quality of our audit work, Moe said. Were trying to figure out why it takes you so much longer than other staff members.

At this point Lowe started to perspire. He wiped his forehead, took a glass of water, and asked: Would it be better if I took some of the work home at night and on weekends, completed it, but didnt charge the firm or the client for my time?

Bo and Moe were surprised by Kevins openness. On one hand, they valued that trait in their employees. On the other hand, they couldnt answer with a yes. Moe looked at Bo, and then turned to Kevin and said: Its up to you to decide how to increase your productivity on audits. As you know, this is an important element of performance evaluation.

Kevin cringed. Was the handwriting on the wall in terms of his future with the firm? he wondered.

I understand what youre saying. Kevin said. I will do better in the futureI promise.

Good, responded Bo and Moe. Lets meet 30 days from now and well discuss your progress on the matters weve discussed today and your future with the firm.

In an effort to deal with the problem, Kevin contacts Joyce, a friend and fellow employee and asks if she has faced similar problems. Joyce answers yes and goes on to explain she handles it by ghost-ticking. Kevin asks her to explain. Ghost-ticking is when we document audit procedures that have not been completed. Kevin dumbfounded, wonders, what kind of a firm am I working for?

Question: KIevin is not a CPA yet. What are his ethical obligations in this case?

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