Capstone – Practical Application of Accounting

The Case of Coopers and Rose – Barbara Montgomery’s Ethical Dilemma

Barbara Montgomery is a first-year auditor for Coopers and Rose, a large public accounting firm. She has been assigned to audit the Lakes Brothers, a clothing retailer with retail outlets throughout the United States. This audit has proved troublesome in the past, and during a staff meeting preceding the audit, Robert Cooley, the supervisor on the audit, says: “We are going to be required to work several hours ‘off-the-clock’ each week until this audit is completed.” He also observes that the client is putting a great deal of pressure on the firm to maintain an acceptable level of fees.

Barbara has been to staff training school, where it was emphasized that not charging a client for hours actually worked as a violation of Coopers and Rose’s employment policy, a violation that could cause her to be dismissed. She also knows that only staff personnel are paid overtime and that supervisors are evaluated on successfully completing audits within allowable budgets. Barbara discusses the issue with John Reed, a second-year staff accountant. John says: “Don’t worry, if you go along no one will find out and Robert will give you a good evaluation.” John says that Robert is highly regarded by senior members of the firm and is likely to be promoted to manager in the near future.

Required: Is it ethical for Barbara to work hours and not charge them to the client? Using the six step approach outlined inSchroeder, R.G., Clark, M.W., & Cathey, J.M. (2013) Chapter 17, resolve this ethical dilemma for Barbara.

Your well-written paper must be 2-3 pages, in addition to title and reference pages. The paper should be formatted according to the APA Requirements. Cite at least two peer-reviewed sources, in addition to the required reading for the module.

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