Question

Chapter 6     P. 265

EYK6-2. Ethics Case Gina DeMarc, a partner in a large CPA firm, has been approached by Bruce Jonas, a manager, with the following recommendation for incentive bonuses for staff members. Jonas recommends that the firm continue to pay each staff member a straight annual salary (Which has been traditionally the only payment made) plus a bonus based on the staff member’s ability to achieve a 10% reduction in time spent on each client’s work. The firm would also pay a 5% finder’s fee for any new client the staff member brings into the firm.

Jonas believes this will motivate the staff to work more efficiently, to sell the firm to new clients, and to service more clients in any given time period. This should also generate more revenue for the firm.

Required

How would you advise Gina Demarc? What ethical issues should she consider?

Answer 1

The proposal by Jonas is quite good and could offer Gina Demarc a good profit margin with limited time and efforts invested.

I would like to advise and ensure Gina Demarc considers the below following points in her business insights:

- It noways increases the cost of the project.

- Each and every staff must be given target based work and proper monitoring is done.

- The given model must benefit every staff member in order to avoid the factor of discrimination rather increases the competition and motivates the employees.

- Let the employees decide their own strategy to achieve the targets and earn the best incentive possible.