A Day in the Life of Brent Dorsey
A Day in the Life of Brent Dorsey
1. What alternatives are available to Brent in regards to the audit of payables? What are the pros and cons of each alternative? * Skip audit steps Pro: Skipping audit steps will allow Brent to complete the work in less time, allowing him to come in under budget Con: Skipping audit steps can lead to inaccurate audit decisions. Misstatements could go unnoticed leading to an inaccurate audit opinion. This alternative also raises a serious ethical issue with serious consequences for the auditors. * Eating time
Pro: “Eating time” will mean a lot of extra “off-line” work for Brent, but he will come in under budget and he may be as a true asset to the company. Con: “Eating time” will create inaccurate and tighter budgets in the future and a poor reflection of the actual cost of doing an audit. This may result in poor decisions at higher levels of management, especially if management is unaware of the time being eaten. * Do the job diligently but do it right and record how long it takes regardless if it comes in under budget or not. Pro: This gets the job done and no shortcuts are taken. Brent may receive a good reputation for not taking shortcuts.
Con: Brent will come in over budget. He may receive a bad reputation for not finishing in the budgeted time, and may receive a poor performance evaluation. * Go to John’s supervisor to discuss the situation and seek advice. Pro: This allows Brent to receive feedback on expectations from higher levels of management. If John’s plans violate management’s expectations, they may resolve the situation. Con: Going over a supervisor’s head without first speaking with that supervisor brings possible negative consequences, including the perception that Brent lacks good judgment in dealing with workplace issues. Brent’s reputation will suffer with John, and could suffer with others in the office as well.
2. What consequences for Brent, the auditing firm, and others involved, may arise from “eating time,” as Scott suggested? Similarly, what consequences for Brent, the auditing firm, and others involved, may arise from not completing audit procedures, as Megan suggested?
Eating time can lead to inaccurate budgeting for future audits. As managers prepare the budget for an audit, often use prior years’ audits as a guide. They see that the job was completed in a shorter time in previous years and prepare their budget accordingly. Accountants on future audits will have to complete audit segments in less time than is realistic, and this can become a cycle, with each year’s budget becoming tighter and less realistic. This can cause stress and problems for future accountants. In the end, eating time is dishonest in that it is an action intended to deceive the users of the time budget report.
Skipping audit steps can have very serious consequences. By not completing the audit steps, material misstatements may slip past the auditors. The auditors may then issue an inappropriate audit opinion, which can be very costly. Skipping audit steps is the best evidence for the lawyers.
3. In your opinion, which of Brent’s alternative courses of action would provide the best outcome and why? What should Brent do? How would you handle the ethical issues involved in this situation?
Brent should talk to John first, and tell him about the situation. There may be some things John could do to relieve the budget pressure. If John is unable to give advice, Brent can talking to the manager above John. Brent should do his best to get the work done within the budgeted hours, but should not cut corners. If he comes in over budget, he knows he did the right thing. Many firms reward people who stand up for ethical behavior and look down on either premature sign-off or eating hours.
4. What could John Peters and the other auditors do to better handle the demands of career and family life? He is in a difficult position, he is being evaluated for a promotion and feels he needs to make a good showing. The Northwest audit is an important audit for the firm, so he feels a greater need to do well on the audit but he is responsible for his coworkers work. John should find better alternatives to helping the staff get back on budget. If there aren’t any ethical alternatives, honesty is the best course of action.
Brent, Megan, and Scott are experiencing pressures that many face in the workplace. New professionals adjusting to the pressures of work need to find ways to balance the competing demands on their time and energy. They need to make sure they are investing the right amount of time each week in other areas of their lives, such as friends and family.