The case is about Kevin Lowe, who is a three months old staff at CPA firm Stooges LLP and the partners of the firm Bo Chambers and his brother Moe “have asked for a sit-down. ” The partners were concerned about the time efficiency, costs and losing clients as Kevin was taking “50 percent longer” in completing his audit work compared to his work mates.
The approaches that Kevin came across to solve the problem were, to reduce the work he does, however it was against Moe because that would mean comprising on the quality of the audit work; Kevin suggested to take work home at night and over weekends and not charging his time to the audit firm neither the client. The partners did not respond to any of the approaches, therefore they concluded that it’s up to Kevin to know how he would want to increase his productivity levels on audits, as this is would have an impact on his “performance evaluation. Lastly, Kevin approached his colleague Joyce and spoke to her about the problem and she suggested “ghost-ticking”, as she practices that technique.
This is practiced when audit procedures are not carried out however, documentation is made in such a manner that the work has been carried out. This results in Kevin wondering on what kind of a firm he is working for. Stakeholders are persons or groups that can affect or be affected by an organization and they can either be internal or external. Internal stakeholders are “individuals and parties within the organization” whereas external stakeholders are “outside parties” of the organization.
In this case, the primary stakeholders are Kevin Lowe, Stooges LLP, Bo Chambers, Moe, current clients and the secondary stakeholders include Joyce, future audit staff, future CPA firms, future clients, Kevin’s family, and other employees. The legal issues in this case are one, employees practicing on ghost-ticking would result in signing off material misstated financial statements. Second, working from home and on weekends and not receiving overtime pay is against the Federal and State Laws. Lastly, taking clients work home would affect the confidentiality of the information if it is misused.
Kevin should follow the Institute of Management Accountants (IMA) standards in carrying out his duties professionally and reporting to the highest level of the organization structure. Stooges LLP being a small CPA firm, the final authority would be to approach the partners of the company. Competence is one of the standards to comply with, Kevin should follow with the “relevant laws, regulations and technical standards (Generally Accepted Accounting Principles)” in reporting the financial information.
Kevin should recognize and communicate his constraints while carrying out audits as this would result in successful completion of an audit. Second confidentiality, if Kevin takes work home, the firm should be concerned with the confidentiality of the information in cases where the documents are misplaced or used for unethical advantage. Last but not least integrity, Kevin should communicate on a regular basis to avoid the actual conflict of interest while performing the audits.
If Kevin applies the “ghost-ticking” approach as suggested by Joyce this would discredit him from his profession if the partners’ come to know it. Lastly credibility, Kevin should disclose any delays in information in conformance with the firm’s policies, that is while performing audits he should update on a regular basis to his supervisor regarding his work progress. Despite Kevin not being a CPA, some of the ethical obligations in this case are one he should perform his professional duties with integrity which is one of the dimensions of trustworthiness of the Josephson’s “Six Pillars of Character. Despite Joyce mentioning about “ghost-ticking”, he should not practice as this would violate the ethical value of honesty.
Second, he should consider looking at the company’s rules and laws and make a judgement on what is wrong and right. Last but not least, for the CPA firm to maintain a strong work ethics one of the requirement is for Kevin to complete his assignments within the time budgeted, with due care leading to great quality of work. Therefore, Kevin should ask the partners to enhance training to in order to work efficiently and within the time budgeted.
Lastly, Kevin should not consider his own self-interest he needs to consider the public interest, employer’s interest and client’s interest. Kevin taking the work home and not charging it to the job can be discussed from the modern moral philosophies. Applying moral philosophies, “it would provide specific principles and rules that could be used to decide what is right and wrong. ” This would help in establishing strategies in dealing with the ethical dilemmas and resolving them in a morally way. Four main ethical methods include teleology, deontology, justice and virtue ethics in making ethical judgements.
In this case, we shall look at it from deontology and teleology philosophies. As per the deontology method, it considers the “rights of individuals and on the intentions associated with a particular behavior, rather than on the consequences. ” Based on this philosophy, Kevin should take work home and not charge it to the job as he has the rights and the partners being the decision makers, they have the obligation to respect those rights rather than on the outcome which was completing the job and not charging it to the firm nor the client.
Under this philosophy Kevin should not practice “ghost-ticking” and eat time. However, this philosophy relies on individual’s own principles regarding what is right and wrong. As per the teleology method “an act is considered morally right or acceptable if it produces some desired result such as pleasure. ” This method considers the moral behavior by looking at its consequences therefore, there are two important philosophies that is, egoism and utilitarianism that guide an individual in making ethical decisions.
Based on this philosophies, Kevin should not take work home and not charge it to the job as he would be considered as egoist. This is because, he would be making a decision that would maximize his own self-interest for the well-being of the firm. However, the drawback of using the egoism philosophy is that it fails to consider the interests of the CPA firm and the client. On the other hand, using the utilitarianism philosophy Kevin can evaluate the harms and benefits of taking the work home and not charging to the client versus not taking the work home.
The harm of not taking the work home might lead Kevin to engage in “ghost-ticking” in order to complete the work and the benefit of him taking the work home would enable him to complete the work. The drawback of applying utilitarianism philosophy is that it can be difficult to allocate values to harms and benefits. The conclusion to such a scenario would be for Kevin to act in accordance with the moral rule that integrity requires not only performing duties ethically but to disclose any information that another party needs to know.
If I were Kevin, I would consider following the company’s established policies on the resolution of the “ghost-ticking” as this would be considered as an ethical practice. Second, I would approach other staff members and consider asking on how I could enhance working efficiently and effectively. In 30 days, I would tell Bo and Me to give me more time on learning the job and would inform them on the “ghost-ticking” practice that’s on going in the firm.