Question

Chapter 8: Employees and Payroll

Additionally, please refer to Chapter 11 in your Cengage Accounting eText, accessible from the eText link in the Course Navigation Panel to the left of your screen.

Requirement

Tonya Latirno is a staff accountant for Cannally and Kennedy, a local CPA firm. For the past 10 years, the firm has given employees a year-end bonus equal to two weeks' salary. On November 15, the firm's management team announced that there would be no annual bonus this year. Because of the firm's long history of giving a year-end bonus, Tonya and her coworkers had come to expect the bonus and believed that Cannally and Kennedy had breached an implicit agreement by discontinuing the bonus. As a result, Tonya decided that she would make up for the lost bonus by working an extra six hours of overtime per week for the rest of the year. Cannally and Kennedy's policy is to pay overtime at 150% of straight time.

Tonya's supervisor was surprised to see overtime being reported, because there is generally very little additional or unusual client service demands at the end of the calendar year. However, the overtime was not questioned, because employees are on the “honor system” in reporting their work

Is Cannally and Kennedy acting in an ethical manner by eliminating the bonus? Explain your answer.

Is Tonya behaving ethically by making up the bonus with unnecessary overtime? Why or why not?

Responses to Classmates:

Please explain to your classmates why deductions from employees' earnings are classified as liabilities for the employer.

Response to Instructor:

Please check your thread for questions or comments from me and be sure to provide a comprehensive response, as requested.

Writing:

Please make sure that your initial post contains a properly cited reference. Please use APA style. You should cite your text as a minimum. Additionally, check your spelling and proofread your post before you hit the submit button.

Answer 1

The Firm(cannally and kennedy) may give bonus based on profit or financial conditions of the firm, unless there is a written clause in the agreement with the employees the firm is under no liability to pay bonus to employee, however as it was standard practice to pay year end bonus the firm is ethically not correct in eliminating the bonus.

Tonya as an employee is ethically wrong by charging unnecessary overtime, as it will have a negative impact on firms performance review and tonya is breaching the trust of the firm.

Response to classmates:

The deduction from employees' salary on behalf of future benefits or perks are liability for the employer because the employer is under the obligation to pay the benefit(Provident funds, gratuity etc) or supply the perks for which deduction was made on later date.

Response to instructor:

concluding the same, the firm is under no obligation to pay bonus to the employee as there is no written contract, however the firm was ethically wrong for not following the standard practice to pay bonus,

also the employee tonya chanrging additional hours with no work performed is treated as unethical behavior at workplace.