Reference no: EM133071031

Question - JT is a staff accountant for Rose and Sonny, a local CPA firm. For the past ten (10) years, the firm has given employees a year-end bonus equal to two weeks' salary. On November 15, the firm's management team announced that there would be no annual bonus this year. Because of the firm's long history of giving a year-end bonus, JT and the co-workers had come to expect the bonus and felt that Rose and Sonny had breached an implicit agreement by discontinuing the bonus. As a result, JT decided to make up for the lost bonus by working an extra six (6) hours of overtime per week for the rest of the year. Rose and Sonny's policy is to pay overtime at 150% of straight time.

JT's supervisor was surprised to see 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 questioned, because employees are on the "honor system" in reporting their work hours.

Is Rose and Sonny acting in an ethical manner by eliminating the bonus? Why? Explain your answer.

Is JT behaving ethically by making up the bonus with unnecessary overtime? Why? Explain your answer.