1. What are the ethical issues involved in the case?
2. Who are the primary stakeholders and how might each of these stakeholders be affected by Debbie's choice?
3. What are the potential courses of action? What are the negative and positive outcomes of each possible option?
4. What are the key values and principles involved? How would you rank these values and principles?
5. Which course of action will you choose if you were in her shoes and why?

Note: The purpose of this illustration is to dramatize the overwhelming complexity of the agreement; the reproduction is intentionally too small to be read. Appendix D. Instructional case D.1. Q-Analytics: an ethics case on unlicensed software In the midst of a busy audit season for Davis, Upton, Crow, and Kerry, LLP, a local accounting firm, Debbie Sabine finds herself trying to increase the efficiency of her audit team's detailed testing procedures to help manage the audit within its established budget. As Debbie has recently moved from a Big-4 accounting firm, where she was a senior auditor, to the role of audit manager at a much smaller firm, the partners of the firm have high expectations for her. Considering ways to reduce the number of hours required for testing, Debbie recalls the efficiency benefits of performing computer-assisted audit techniques (CAAT's) with a generalized audit software package, Audit Query Language (AQL), at her prior firm. Debbie was thoroughly experienced with AQL, and believes that, if she could get the firm to purchase the software, the time to conduct detailed audit-testing procedures could be reduced by 20%, resulting in reduced expenses, increased profitability, and improved audit quality through additional testing. She can see, however, that the partners at her new firm are not willing to invest in the software, as a result of limited computer skills of their staff and their own lack of direct knowledge of the software's benefits. Debbie believes, however, that she could convince them if she had some concrete evidence of the benefits of the use of AQL Software. While researching and analyzing the costs and benefits of software packages, Debbie found a website with an unprotected copy of Q-Analytics, a recent commercial entrant to the generalized audit software market. It is very similar to, and perhaps better than, the application at her prior firm. With growing concerns of exceeding the budgets for two of the audits she is managing, Debbie finds herself in a dilemma: in an attempt to reduce the time required to complete audit testing procedures, should she download the software and provide it to her staff along with a quick training overview? During her first two audits, Debbie experienced client issues resulting in more hours to complete the audit than originally budgeted. Her concerns about the partners' assessment of her team's performance on these audits has prompted her to consider using the Q-Analytics software downloaded from the Internet site. She believes that her team could quickly become proficient with the software and complete the two audits under budget. Debbie approaches her team and provides the link to the Q-Analytics software so that these auditors, in turn, would be able to load the software onto their computers. Given that this is not standard protocol for software installation, several team members are concerned about installing the software. However, Debbie assures them that she is conducting a study to evaluate the efficiencies gained by using the software, to find support for purchasing licenses. She reminds them that poor year-end performance evaluations could affect raises and promotions. The following individuals and society may be affected by Debbie's decision. D.2. Sean Robin, developer and programmer of Q-Analytics Two years ago, Sean Robin resigned from an audit position at a Big-4 accounting firm to develop a software application that would perform routine audit procedures of transactional data maintained in databases. Sean's vision was to increase the effectiveness of audit testing by allowing rapid testing of 100% of transactions. As a result, Sean forwent $90,000 worth of salary and incurred $100,000 of expenses in the planning and development of the software. Q-Analytics was copyrighted and is marketed by Business Tools, Inc., for $3000 per individual license, with discounts based on the number of licenses. The licensing revenues cover royalties to Sean for each copy (30%), plus recovery of Business Tools, Inc.'s production and marketing costs and a nominal profit. To date, the software has generated total revenue of nearly $150,000. A survey published recently in a professional journal has indicated that during initial implementation, the software reduced the time required for detailed 56 C.D. Bailey, J.S. Soileau / J. of Acc. Ed. 29 (2011) 50-59 testing by 15%, on average, thus creating high expectations for future sales. A friend has asked Sean about the software distributor's security policies, including techniques such as hardware keys, raising additional concerns for Sean. D.3. Laura Horton, Director of Sales, Accounting Applications at Business Tools, Inc Laura is Director of Sales for the small software distribution company that distributes Q-Analytics; the company has annual revenue of $50M and specializes in accounting, finance, and economic modeling software applications. Customers purchasing fewer than 10 copies of the software are provided a hardware key that must be inserted in the computer's USB port while the application is in use. To reduce costs associated with lower license fees for larger licensees, customers purchasing more than 10 licenses receive a modified version of the software, which version does not require a hardware key but only a password and web registration. Laura has recently become concerned that hackers or pirates may circulate unprotected copies. D.4. Debbie Sabine, Audit Manager, Davis, Upton, Crow, and Kerry, LLP Despite frequently working more than 70 hours a week for much of the past 3 years as an auditor for a Big-4 CPA firm, Debbie fulfilled testing and experience requirements to become a CPA. While at that firm, Debbie continually focused on processes within her audits to more efficiently perform assigned tasks. Despite her exceptional work ethic and the process improvements she brought to the firm, Debbie was recently passed over for an expected promotion to Audit Manager. Tired and dejected after years of poor work/life balance, Debbie decided it was in her best interest to accept a manager position at a local firm at which a former colleague indicated work/life balance was a priority. Given her experience and ability to identify efficiency opportunities, the partners of the firm were expecting great things from Debbie and were anticipating for her a fast-track promotion to partner. Knowing their high expectations, Debbie first attempts to identify quick changes that could be made to firm procedures. She attempts to evaluate the potential benefits of the modifications, given the ability of firm employees by testing them within the audit engagements she manages. D.5. Members of Debbie's audit team Debbie's audit team consists of both experienced seniors and staff members. Both groups are aware that their current performance will substantially influence the upcoming annual review and promotion process. Therefore, they are eager to please Debbie. However, to a certain extent, senior members view Debbie as an outsider who by coming in as a manager may have reduced their own potential for promotion. As a result, some of these individuals may harbor some animosity toward her. The firm requires staff members to have successfully completed the CPA exam before being eligible for promotion to senior-level auditor. As a result of recent completion of college coursework and preparation for the CPA exam, both seniors and staff members are keenly aware of the ethical requirements associated with the CPA designation. However, seniors and staff members are not aware of the specific penalties associated with failure to meet such ethical standards of the firm or the profession. In addition, as most of the seniors and staff members completed their education within the past 5 years, most have firsthand experience related to copying music and software for personal use. D.6. Mike Davis, managing partner, Davis, Upton, Crow, and Kerry, LLP Mike is the managing partner of the auditing firm. Although the firm is relatively young, Mike and the other partners hope to continue the firm's growth and profitability by providing high quality tax, auditing and other accounting services to businesses throughout the state. In addition to emphasizing hard work, Mike stresses the need for employee work/life balance. As a result, he expects management to effectively manage audit engagements within 10% of the planned and budgeted employee hours and expenses. These considerations figure prominently in the evaluation of equity offerings into the partnership.