Scenario – audit time budget pressur

Rehab after completing her bachelor’s degree in Accounting has joined the CPA firm ACE Auditing & Consultancy Services as an Audit Trainee on 01st July 2020. Rehab has been assigned to the audit of Star LLC. The audit supervisor Jawahar was informing Rehab that she is taking more time in completing the audit work assigned to her and because of her delay the audit team is facing with the problem to complete the audit within the budgeted time period.

Last week the partner in charge of the firm – Mr. Waleed have asked Rehab to meet him in his office. During the meeting, the following conversation took place:

Mr. Waleed: Rehab, the reason why I asked you to see me is the time record sheet. We found that your time record sheet indicate that it takes you 50 percent longer time to complete the audit work than the other colleagues in your audit team.

Rehab: I understand, but Mr Waleed, I just joined three months before and still learning on the job.

Mr. Waleed: That’s true, but you know that we have fixed budget for this audit. Every hour you spend more than the budgeted time will cost money for the firm. If this continues, we must bill extra to the client whose audit you work on, which the client will be reluctant accept. We do not want to lose our clients.

Rehab: I do understand Mr. Waleed, However, it is taking more time than I expected too. If I am to cut down the time it will affect the quality of the audit as I am unable to reconcile in the given short period.

Mr. Waleed: I would never compromise the quality of our audit. I am trying to figure out why it takes you so much longer than other staff members.

Rehab: If this is the case, am I allowed take some of the work home at night and on weekends, complete it. This will not charge the firm or the client for the extra time I am spending on the audit.

Mr. Waleed was surprised by the Rehab’s openness. He valued the character of Rehab, but he could not provide an answer as ‘yes’ for Rehab’s request. He concluded the meeting by stating that it is Rehab’s call to decide on how to increase her productivity on audits. As her progress on the discussed matter decides her future with the firm.

With the effort to deal with the problem, Rehab approached Muna, one of the senior auditors in her team and asked whether Muna had faced such problem. Muna stated, ‘Yes Rehab, I

initially found it difficult to complete my work within the budgeted time. Later, I handled it by ghost ticking. (Documenting audit procedures that have not been completed is called the ‘Ghost ticking’). Further she insisted Rehab to do the same to overcome the problem as no one will be watching.

Assume you are in the position of Rehab; Explain how you would be reacting to the situation in the given scenario.

Your report should:

i. Discuss your (Rehab’s) ethical obligation as an Audit Trainee,

ii. Evaluate using the ethical theories (consequential, non-consequential and virtue), whether to take work home to complete and not to charge for the job or to involve in ghost ticking

iii. Discuss your approach in explaining your stance to Mr. Waleed in your next meeting with him regarding the problem in the given scenario.

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