Can someone help me explain this in a short paragraph?

Question

Dan,(a CPA and a staff accountant)for B&L's(local CPA firm). It's been the policy of the firm to provide a holiday bonus equal to 2weeks salary to all employees. The firm's new management team announced on Nov.25 that a bonus equal to only 1week salary would be made available to employees this year. Dan thought that this policy was unfair because he and his coworkers planned on the full 2week. The 2week bonus had been given for 10straight years, so it seemed as though the firm had breached an implied commitment. Thus, Dan decided that he would make up the lost bonus week by working an extra 6hours of overtime per week over the next 5weeks until the end of the year. B&L's policy is to pay overtime @ 150% of straight time. Dan's supervisor was suprised to see overtime being reported, since there is generally little additional or unusual client service demands at the end of the calender year.

Discuss whether the firm is acting in an ethical manner by changing the bonus.

Answer 1

I think there's no right or wrong answer to this question. You didn't state the assumptions and you didn't give the reasons for the change in policy. If the policy was changed even tho the firm continued to make the same level of profits, then it does look like the partners just want ot pocket more for themselves. However if the firm had been losing clients and therefore profits had been dropping, I don't think the employees can hold the firm to the practice, notwithstanding that it's been in force for the last 10 yrs. In such circumstances I'm sure the staff would rather keep their jobs with lower bonus than lose the jobs altogether. When an exam question says "Discuss", remember to discuss both sides and don't sound too dogmatic about either argument. In a real-life situation, it would be tough for Dan to have his O/T approved since he couldn't prove what he worked on, seeing that it was the slack period. It would have been good if the firm had explained to the staff the need to change the policy.