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ETHICAL DILEMMA Babar has been working 6 months as a staff assistant for Baig&Baig CAs. Currently he is assigned to the audit of Royal Manufacturing

ETHICAL DILEMMA

Babar has been working 6 months as a staff assistant for Baig&Baig CAs. Currently he is assigned to the audit of Royal Manufacturing Company under the supervision of Farman, an experienced audit senior. There are three auditors assigned to the audit, including Babar, Farman, and a more experienced assistant, Dastgeer. During lunch on the first day, Farman says, "It will be necessary for us to work a few extra hours on our own time to make sure we come in on budget. This audit isn't very profitable anyway, and we don't want to hurt our firm by going over budget. We can accomplish this easily by coming in a half hour early, taking a short lunch break, and working an hour or so after normal quitting time. We just won't enter that time on our time report." Babar recalls reading the firm's policy that working hours and not charging for them on the time report is a violation of Baig&Baig's employment policy. He also knows that seniors are paid bonuses, instead of overtime, whereas staff are paid for overtime but get no bonuses. Later when discussing the issue with Dastgeer, he says, "Farman does this on all of his jobs. He is likely to be our firm's next audit manager. The partners think he's great because his jobs always come in under budget. He rewards us by giving us good engagement evaluations, especially under the cooperative attitude category. Several of the other audit seniors follow the same practice

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