Chapter 6 P. 265

EYK6-2. Ethics Case Gina DeMarc, a partner in a large CPA firm, has been approached by Bruce Jonas, a manager, with the following recommendation for incentive bonuses for staff members. Jonas recommends that the firm continue to pay each staff member a straight annual salary (Which has been traditionally the only payment made) plus a bonus based on the staff members ability to achieve a 10% reduction in time spent on each clients work. The firm would also pay a 5% finders fee for any new client the staff member brings into the firm.

Jonas believes this will motivate the staff to work more efficiently, to sell the firm to new clients, and to service more clients in any given time period. This should also generate more revenue for the firm.

Required

How would you advise Gina Demarc? What ethical issues should she consider?