Ethical Obligations and Decision Making in Accounting, 4/e 1
Case 1-7 Eating Time
This case is treated as GVV in the Test Bank IM in Chapter
2. Faculty can assign the case in Chapter 1 or delay it until
Chapter 2, if they plan to use it for GVV testing purposes in
Chapter 2.
Kevin Lowe is depressed. He has been with the CPA firm Stooges LLP for only three months.
Yet the partners in charge of the firm—Bo Chambers and his brother, Moe—have asked for a
“sit–down.” Here’s 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, I am new and still learning on the job,” replied Lowe.
“That’s 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 don’t
want to lose clients as a result.”
Kevin cringed. Was the handwriting on the wall in terms of his future with the firm?
“I understand what you’re saying,” Kevin said. “I will do better in the future—I promise.”
“Good,” responded Bo and Moe. “Let’s meet 30 days from now and we’ll discuss your progress
on the matters we’ve discussed today and your future with the firm.”
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NOTES
This case has students explore the pressure to cheat or lie. This case is good case to discuss the
slippery slope of ethical situations. It also deals with how the culture of a firm (i.e., eat time)
should affect one’s actions when trying to act ethically.
Ethical Issues
Rights Perspective: Working a regular overnighter is setting one up for burn-out, if not a health
safety threat. Employees have the right to receive a competitive wage. However, working twice
the hours without being paid overtime is working for half the pay.
Questions
1. Kevin is not a CPA yet. What are his ethical obligations in this case?
As an inspiring CPA candidate, Kevin has the same the ethical obligations as a CPA. He
should place the public interest ahead of all other interests, be independent of the client,
make decisions objectively, exercise due care in the performance of professional services,
2. Given the facts in the case, evaluate using deontological and teleological reasoning
whether Kevin should take work home and not charge it to the job. What about
engaging in ghost-ticking?
Kevin might be tempted to work off the clock automatically. Kevin might feel that he has
no choice to do otherwise or else he will be fired. The pressure to lie about doing the
work may add more pressure to Kevin and add to the possibility of burn out. If Kevin
were to take the work home, he may start cutting corners and performing at a less than
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3. What would you do if you were Kevin and why? How would you explain your
position to Bo and Moe when you meet in 30 days?
Kevin should try to track his time over two weeks to determine what is causing the excess
time. Is he taking too long trying to figure things out? Should he be asking questions
sooner in his work to ensure that he is on the right track and for clarification before he
has invested too much time? Is there a supervisor or senior at the client’s that can answer
his questions and provide guidance? When Kevin runs across something that he considers
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