1.

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 and
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 and 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.
2. 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 “o-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.
3. What consequences for Brent, the auditing firm, and others involved, may arise
from “eating time,” as Han 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.
4. 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-o or eating hours.
5.
a. How might the confirmation tendency affect Brent’s decision?
In this situation, the confirmation tendency could affect Brent’s decision by not allowing him
to look objectively at the data. He may have in mind that the audit will be good and not find
any material misstatements. If this be the case, an actual material misstatement that may arise
could be overlooked because Brent is so convinced that the audit will be good. He would not
be looking for material misstatements but would simply be looking for data that is in order.
Any thing that conflicted his preconceived notion would be put aside due to the fact that it
doesn’t line up with his preconceived notion
b. How might the availability tendency come into play in Brent’s decision?
In this situation, the availability tendency could affect Brent’s decision making because the
audits of accounts payable in the past have been free of material misstatement. It would be
easier for Brent to take the word of past years audits and not do as much work on this year’s
audit. With the budget being of big concern, Brent could easily justify his action to take the
opinion of the last few audits. Because this is a big client of the firm and Brent wants to be
promoted, he could easily fall into availability tendency to ensure he meets the budget
c. What could Brent do to mitigate the effects of the confirmation and availability
tendencies to improve his professional judgment?
In order for Brent to mitigate the effect of these biases, Brent should not even consider what
has happened in past year audits. He should look at this like it is the first time it is being
audited. He should not have any reservations that the audit will be good and only look for
confirming information. Instead he should objectively look at the data and allow it to lead
him where it leads him, no matter the outcome. This will better ensure the quality of the audit
and that he is using the best professional judgment possible. He could also have another
individual look through what he has done to better ensure that he wasn’t being biased.
6. Consider what judgment frames Brent seems to be focused on. What other
frames might be useful for Brent to consider in making a well-considered
decision in this case?
Brent seems to be focused on Megan’s and Han’s judgement frames so far. Both Megan and
Han find their alternatives to be okay which can influence Brent’s judgement. Brent needs to
not let these frames blind his judgment and start thinking about the solution from other
perspectives. He needs to focus on ethical frames that will get him to meet his goal. He might
be able to come up with other alternatives if he wasn’t framing this situation in a highly
stressful environment. He’s being pressured by the client, John, and his wife to cut down the
hours significantly and quickly. If he could frame this situation in a not-so-stressful
environment, perhaps he can come up with solutions that can cut the audit hours little by little
that would later accumulate into a large amount of hours being cut.