Question

You have worked as a staff auditor for two and one-half years and have mastered your job. You will likely be promoted to a senior position after this busy season. Your current senior was promoted about a year ago. He appreciates your competence and rarely interferes with you. As long as he can report good performance to his manager on things she wants, he is satisfied. The manager has been in her position for three years. She is focused on making sure audits run smoothly and is good at this. She is not as strong on the softer skills. Although she is approachable, her attention span can be short if what you are saying does not interest her. You are aware that she expects her teams to perform excellently during this busy season and she hopes to be promoted to senior manager as a result, bringing her closer to her goal of making partner early.

1. Determine the main potential ethical dilemmas. Next, use the seven (7) steps in the ethical decision-making framework to recommend one (1) course of action you would take in order to avoid the ethical dilemmas. Provide a rationale to support your recommendation.

2. based on your recommendation in Part I, suggest one (1) strategy that would support you making the right decision without undermining the manager’s confidence in your problem-solving ability in a difficult situation. Provide a rationale to support your response.

Answer 1

1. Following are the main potential ethical dilemmas to deal with:

1. With the current workload, working thoroughly on the additional analysis of client's account will further endanger the time budget allotted which has been same as last year.

2.The more time is spent on the engagement, the less profitable it will be for the audit firm, which will displease the manager and her superiors.

3. When the senior is approached, he suggests two alternatives. Either complete the analysis and simply not record the hours (doing so would prevent the reported audited hours from going too far over budget) or do a minimal job on the analysis, which would save time and avoid having to question the client too much. Staff members express discomfort with either of these strategies.

4.Staff auditors express their concerns regarding the perceptions that running over budget will create and the reputational issues that short-circuiting the analysis could create.

The course of action that can be suggested here is using the first idea the senior suggested- complete the analysis and do not record the hours

Rationale:

Both the ideas suggested by the senior are unethical considering audit ethics but this is an emergency situation. There are several crisises. Required manpower is not available. Client is unable to reach and interaction with him is time consuming where as time budget also needs to be adhered with. It is next to impossible to abide by all benchmarks in order to complete the analysis.

Doing a minimal job on the analysis is not suggested since reputation is more important than anything. a damaged reputation may again take years to build and the stigma never actually goes away.

Hence not recording the hours and completing the analysis is the best available choice left to pursue. Although it is unethical but lesser than the second alternative. Additionally, this option can be defended keeping in mind the genuine crisises the audit firm is currently going through.

2. One strategy that can support the recommendation given in 1 is being sure of having a realistic view of Consequences. The mind should be able to draw a clear picture. Explanation needs to be pre pepared and you must be ready with your defence tactics if and when questioned on the issue regarding why you chose to not record the hours.