Reference no: EM133186410

Question - Barbara Bach is a staff accountant for O'Malley and Kennedy, a local CPA firm.

For the past 10 years, the firm been giving employees a year-end bonus equal to two weeks salary.

On November 15, the firm's management team announcement that there would be no annual bonus this year. Barbara and her coworkers have come to expect their year-end bonus and believe that O'Malley and Kennedy had breach an implicit agreement by discontinuing the bonus.

As a result, Barbara decided that she would make up for the last bonus by working an extra six hours overtime per week for the rest of the year. O'Malley and Kennedy's policy is to pay overtime at 150% of straight time.

Barbara supervisor was surprised to see the overtime being reported, because there is generally very little additional or unusual client service demands at the end of the calendar year. However, the overtime was not question, because employees are on the "honor system" and reporting their work hours.

Is the firm of O'Malley and Kennedy acting in an ethical manner by eliminating the bonus? Explain your answer.

Is Barbara behaving ethically by making up the bonus with unnecessary overtime? Why or why not?