Accounting (Text Only)
26th Edition
ISBN: 9781285743615
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 11, Problem 11.1CP
Ethics and professional conduct in business
Tonya Latirno is a certified public accountant (CPA) and staff accountant for Kennedy and Kennedy, a local CPA firm. It had been the policy of the firm to provide a holiday bonus equal to two weeks’ salary to all employees. The firm’s new management team announced on November 15 that a bonus equal to only one week’s salary would be made available to employees this year. Tonya thought that this policy was unfair because she and her coworkers planned on the full two-week bonus. The two-week bonus had been given for 10 straight years, so it seemed as though the firm had breached an implied commitment. Thus, Tonya decided that she would make up the lost bonus week by working an extra six hours of overtime per week over the next five weeks until the end of the year. Kennedy 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 firm employees are on the “honor system” in reporting their overtime.
Discuss whether the firm is acting in an ethical manner by changing the bonus. Is Tonya behaving in an ethical manner?
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Tonya Latirno is a certified public accountant (CPA) and staff accountant for Kennedy and Kennedy, a local CPA firm. It had been the policy of the firm to provide a holiday bonus equal to two weeks’ salary to all employees. The firm’s new management team announced on November 15 that a bonus equal to only one week’s salary would be made available to employees this year. Tonya thought that this policy was unfair because she and her coworkers planned on the full two-week bonus. The two-week bonus had been given for 10 straight years, so it seemed as though the firm had breached an implied commitment. Thus, Tonya decided that she would make up the lost bonus week by working an extra six hours of overtime per week over the next five weeks until the end of the year. Kennedy 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…
Tonya is a staff accountant for 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 co-workers had come to expect the bonus and felt that the CPA firm owed the money to the employees. 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 because overtime hours are paid at "time and a half" rates.
Tonya's supervisor was surprised to see overtime being reported, because there's usually not an increase in client service at the end of the calendar year. However, the overtime was not questioned, because employees are on the "honor system" in reporting their work hours.
What are your thoughts on this situation?
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 thatshe 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…
Chapter 11 Solutions
Accounting (Text Only)
Ch. 11 - Does a discounted note payable provide credit...Ch. 11 - Employees are subject to taxes withheld from their...Ch. 11 - Prob. 3DQCh. 11 - Prob. 4DQCh. 11 - Prob. 5DQCh. 11 - Prob. 6DQCh. 11 - To match revenues and expenses properly, should...Ch. 11 - Prob. 8DQCh. 11 - When should the liability associated with a...Ch. 11 - Prob. 10DQ
Ch. 11 - Prob. 11.1APECh. 11 - Proceeds from notes payable On January 26, Nyree...Ch. 11 - Prob. 11.2APECh. 11 - Prob. 11.2BPECh. 11 - Prob. 11.3APECh. 11 - Prob. 11.3BPECh. 11 - Prob. 11.4APECh. 11 - Prob. 11.4BPECh. 11 - Prob. 11.5APECh. 11 - Prob. 11.5BPECh. 11 - Prob. 11.6APECh. 11 - Prob. 11.6BPECh. 11 - Prob. 11.7APECh. 11 - Estimated warranty liability Quantas Industries...Ch. 11 - Quick ratio Nabors Company reported the following...Ch. 11 - Quick ratio Adieu Company reported the following...Ch. 11 - Current liabilities Bon Nebo Co. sold 25,000...Ch. 11 - Entries for discounting notes payable Griffin...Ch. 11 - Evaluating alternative notes A borrower has two...Ch. 11 - Entries for notes payable A business issued a...Ch. 11 - Prob. 11.5EXCh. 11 - Prob. 11.6EXCh. 11 - Prob. 11.7EXCh. 11 - Calculate payroll An employee earns 32 per hour...Ch. 11 - Calculate payroll Diego Company has three...Ch. 11 - Summary payroll data In the following summary of...Ch. 11 - Prob. 11.11EXCh. 11 - Payroll entries The payroll register for Proctor...Ch. 11 - Payroll entries Widmer Company had gross wages of...Ch. 11 - Prob. 11.14EXCh. 11 - Prob. 11.15EXCh. 11 - Prob. 11.16EXCh. 11 - Prob. 11.17EXCh. 11 - Prob. 11.18EXCh. 11 - Prob. 11.19EXCh. 11 - Accrued product warranty General Motors...Ch. 11 - Prob. 11.21EXCh. 11 - Quick ratio Gmeiner Co. had the following current...Ch. 11 - Quick ratio The current assets and current...Ch. 11 - Liability transactions The following items were...Ch. 11 - Entries for payroll and payroll taxes The...Ch. 11 - Wage and tax statement data on employer FICA tax...Ch. 11 - Prob. 11.4APRCh. 11 - Payroll accounts and year-end entries The...Ch. 11 - Prob. 11.1BPRCh. 11 - Entries for payroll and payroll taxes The...Ch. 11 - Prob. 11.3BPRCh. 11 - Prob. 11.4BPRCh. 11 - Payroll accounts and year-end entries The...Ch. 11 - Prob. 11.3CPPCh. 11 - Ethics and professional conduct in business Tonya...Ch. 11 - Prob. 11.2CPCh. 11 - Prob. 11.3CPCh. 11 - Contingent liabilities Altria Group, Inc., has...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 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…arrow_forwardMargaret is the manager of a medium-size company. A few years ago, Margaret persuaded the owner to base a part of her compensation on the net income of the company. Each December she estimates year-end financial figures in anticipation of the bonus she will receive. If the bonus is not as high as she would like, she offers several recommendations to the accountant for year-end adjustments. One of her favorite recommendations is for the controller to reduce the estimate of doubtful accounts. What effect does lowering the estimate for doubtful accounts have on the income statement and balance sheet?arrow_forwardMargaret is the manager of a medium-size company. A few years ago, Margaret persuaded the owner to base a part of her compensation on the net income of the company. Each December she estimates year-end financial figures in anticipation of the bonus she will receive. If the bonus is not as high as she would like, she offers several recommendations to the accountant for year-end adjustments. One of her favorite recommendations is for the controller to reduce the estimate of doubtful accounts. What type of internal control(s) might be useful for this company in overseeing the manager's recommendation for accounting changes?arrow_forward
- Margaret is the manager of a medium-sized company. A few years ago, Margaret persuaded the owner to base a part of her compensation on the net income of the company. Each December she estimates year-end financial figures in anticipation of the bonus she will receive. If the bonus is not as high as she would like, she offers several recommendations to the accountant for year-end adjustments. One of her favorite recommendations is for the controller to reduce the estimate of doubtful accounts. What effect does lowering the estimate for doubtful accounts have on the income statement and balance sheet? What type of internal control(s) might be useful for this company in overseeing the manager's recommendation for accounting changes?arrow_forwardIbrahim is member of ICAP working as a unit accountant. He is a member of a bonus scheme under which, staff receive a bonus of 10% of their and liability figures. Ali has explained this to Bashir. Bashir responded that Ali should ignore this information as the company need to maintain a certain ratio between the assets and liabilities in the statement of financial position. Required: What are the ethical implications for Ali in this case?arrow_forwardHarmony is the Senior accountant of a Bank. Junior accountants of all the branches reportto her. While preparing for the final quarter sales report, she finds that two out of the fourbranches have failed to achieve the sales targets for the second consecutive quarter.According to the company policy, the branches that fail to achieve targets in twoconsecutive quarters have to be closed. Harmony feels sad for all the people losing theirjobs and decides that she will overstate the sales revenue generated by every branch andreport manipulated figures in the financial statements. Answer the following questions. Describe Harmony’s actions from ethical standpoint. Is she doing the right thing? What can be the consequences of Harmony’s actions. What are the risks involved? What would you suggest to Harmony? (please cite paragraph according to the MLA citation? Please note this is not an essay.arrow_forward
- Richard has been a highly regarded employee of the Brier Corporation for almost 20 years. Her loyalty to the company is reflected in her dedication to her job as a general accounting clerk, from which she has not taken a vacation in almost 12 years. Because of her dedication and long tenure, she has acquired many related responsibilities, which have allowed Brier Corporation to reduce its workforce through attrition, control salary expenses and become more efficient and competitive. The following describes Richard's responsibilities. Richard receives copies of credit sales orders from the sales department. She accesses the AR subsidiary ledger from her office computer and records the AR from these documents. She then records the sale in the sales journal and posts the transactions to the general ledger accounts. Cash receipts in payment of customer AR come directly to her office. She records the cash receipts in the GL cash and AR accounts and updates the AR subsidiary ledger. She…arrow_forwardRichard has been a highly regarded employee of the Brier Corporation for almost 20 years. Her loyalty to the company is reflected in her dedication to her job as a general accounting clerk, from which she has not taken a vacation in almost 12 years. Because of her dedication and long tenure, she has acquired many related responsibilities, which have allowed Brier Corporation to reduce its workforce through attrition, control salary expenses and become more efficient and competitive. The following describes Richard's responsibilities. Richard receives copies of credit sales orders from the sales department. She accesses the AR subsidiary ledger from her office computer and records the AR from these documents. She then records the sale in the sales journal and posts the transactions to the general ledger accounts. Cash receipts in payment of customer AR come directly to her office. She records the cash receipts in the GL cash and AR accounts and updates the AR subsidiary ledger. She…arrow_forwardDonald Waddell got a job at the Boyce Thompson Institute for Plant Research. Waddell did not have an employment contract for a fixed term, and the institute’s employee manual said that his job was “terminable at will.” Soon after he was hired, the institute implemented a whistleblower policy designed to encourage “the highest standards of financial reporting and lawful and ethical behavior.” Waddell repeatedly told his supervisor, Sophia Darling, that she needed to file certain financial documents more promptly. Darling fired Waddell, telling him that he was disrespectful and insubordinate. Define “at will” employment and wrongful termination. Based on the evidence given, was Waddell wrongfully terminated? Why, or why not.arrow_forward
- TJ, a salaried employee, was terminated from the company in June of this year. Business had been slow since the beginning of this year, and each of the operating divisions had laid off employees. TJ's dismissal was processed through the Human Resources Department, but the information was not relayed to the corporate payroll office. As had been the policy, checks for the workers at remote sites were mailed (or directly deposited) to the employees. The mailing of TJ's checks continued for the next four weekly paydays. It wasn't until the monthly payroll reports were sent to TJ's supervisor that the error was detected. TJ refused to return the four extra checks. What action should the company take?arrow_forwardIn order to improve the cash flow of the company, Neal Emerald decided to postpone depositing all employment taxes a few months ago. He told his sales manager, “I’ll pay up before the IRS catches up with me.” What risks does Emerald face by not upholding his responsibility for the collection and payment of employment taxes?arrow_forwardJacob, a company secretary, wishes to take a holiday. Jacob realises he needs to leave someone in charge of company administration who will also report appropriately to the directors. Jacob asks the head of accounting within the company to carry out his role as company secretary, which includes attending certain company meetings with the directors, particularly when negotiating serious contracts. When Jacob goes on holiday, the accountant assumes Jacob’s role. He attends certain meetings where he is introduced as the company secretary, even though he has not been officially appointed. The accountant is requested to close a few deals by the directors, which he does, though he forgets certain instructions as to how the company’s customers should pay and. in particular, approves a loan by the company’s bank to a colleague, which he guarantees on behalf of the company. The directors find the various mistakes made by the accountant on certain contracts and want to cancel those contracts.…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT
What Is And How To Calculate FICA Taxes Explained, Social Security Taxes And Medicare Taxes; Author: Whats Up Dude;https://www.youtube.com/watch?v=fzK3KDDYCQw;License: Standard Youtube License