Question

An employee has come to you with a request to take on a part-time job. The employee would be working for Price Waterhouse as a contract employee during tax season. The employee has assured you that she will not work more than 20 hours a week, primarily on weekends. Price-Waterhouse is one of the five accounting firms that has put a bid in to do the auditing for G-BioSport.

Possible Solutions:

Allow the accountant to work as long as a confidentiality agreement is signed.

Allow the accountant to work as long as the company does not choose PW for the audit work.

Do not allow the accountant to work for PW or any other accounting auditing company but do allow other part-time work.

Do not change the policy and allow the employee to work with no strings attached.

Now -- how well does each option meet the requirements of the just savings principle, assuring that resources are available for next generations. Which option best meets this requirement. Discuss why the other options do not meet the requirement of the just savings principle as well.

Answer 1

1. Allow the auditor to work as long as confidentiality agreement is signed. This is bad solution because you cannot employee auditor working for auditing firm even through auditor signs confidentiality agreement. If government or any law agency unearth this, it will lead to severe problems. One advantage of having auditor from reputed company to work for you is compliance at low cost. Small firm face problems in auditing work with limited resources, hence by employing auditor from reputed firm for part time will help in warding off problems.
2. Allow the accountant to work as long as company does not choose Pw for the audit work. This is good solution because there would be no conflict of interest in auditing process. This also helps in easy access of required resources at low cost (since accountant work part time, salary will be low). Small firm face problem in accounting as there is limited resources.
3. Do not allow the accountant to work for PW or any other accounting auditing company but do allow other part-time work. This is good solution but not as good as previous solution. This will allow company to hire employees at low cost, but quality of accountants is questionable. Generally, auditors from reputed firm will have good exposure to auditing practices then others.
4. Do not change the policy and allow the employee to work with no strings attached. This is bad solution among all other solution. This is because as per law you cannot employee auditor from external auditing firm. This will lead to severe problems to companies.

Cost & ethics vice Allowing the accountant to work as long as company does not choose Pw for the audit work is the best solution. This is because small firms faces challenge in compliance to accounting standards with limited resources. By employing auditor from reputed firm for part time will help in solving problem.