22 Oct Read the case titled?XYZ LLP, and answer the following questions. The three parts must be clearly identified in?your answer (i.e., it cannot be just a single continuous answer without show

CASE: DEVIANCE AT XYZ LLP

John Smith slouched over his desk in the audit room at Videonics, his largest year-end client. Since being promoted to senior manager a year and a half ago, John felt like he was being even more heavily scrutinized by his partners—including Joe Trumbell, his mentor and long-time friend. While Joe and other partners remained generally complimentary of John's work, they seemed particularly teed up over the work behavior of several staff members of the firm—including some who were on multiple jobs with John. When Joe approached John and told him that John's proximity to the staffers involved made him the perfect guy to investigate this matter further, John accepted the assignment. That was four months ago.

The clock on the wall behind him ticked closer to 11:00 p.m. John really wished Joe had asked someone else to shoulder this burden but, unfortunately, he had not—and John knew he had a meeting with Joe tomorrow morning to update him on some of his work. He glanced at his notes, and rehashed conversations with firm members and clients during that period: a staffer with a penchant for surfing the web; another who appeared to somewhat regularly “disappear” for brief periods of time during the workday; two others who submitted reimbursement reports with personal, non-work-related receipts; a client who mentioned to a partner that she had an “inappropriate” conversation with a senior staffer at XYZ pertaining to the staffer's dissatisfaction with his job at the firm. What was happening at XYZ?

John looked over at the stack of work papers piled on the desk chair next to him. Don't I have enough to do without worrying about this stuff? he thought to himself. But as he fixed his gaze back on the notepad in front of him, he realized he could not shake Joe Trumbell's words from his head. “The partners think there is something systemic going on here.” “Systemic” suggested that each of these situations were somehow related. But how?

The Early Days at XYZ LLP

John could remember the day he accepted his job offer from XYZ. While he had an offer from one of the Big 4 firms, he accepted the position at XYZ almost as soon as it was offered to him. XYZ was a large, multi-national firm, very reputable and consistently ranked within the top tier of accounting firms. In John's mind, it had all of the benefits of one of the Big 4 without the “swagger.” On top of that, John was impressed that people tended to stay with the firm longer than at others, and the career opportunities seemed promising—several of his alma mater's grads were still with the Boston office where he had accepted his position.

Since his first day at the firm, John was part of the Manufacturing, Retail, and Distribution line of business. And while friends of his liked the idea of jumping into the “hot” Technology area or Financial Services sector, John was always interested in product-oriented companies, and he liked the idea of auditing businesses that produced and/or sold something tangible. His first year, John was assigned two large busy-season accounts and a plethora of smaller accounts, and his work schedule was relatively busy. He was seldom unassigned and in the office, and when he was out in the field with audit teams, his “in-season” workdays would generally stretch from around 8:00 a.m. until 6:00 p.m. and sometimes later.

He did not mind, though. In fact, he felt he was learning a great deal. He particularly enjoyed his two largest accounts—Videonics, a manufacturer and distributor of mid-range audio/video equipment; and Seedman's, a popular, family run furniture retailer with over 20 stores throughout the northeast. Both of these accounts required pretty heavy coverage throughout the year—with a senior staff member posted in the audit room at these clients' for much of the year, and an audit team of about three or four others joining the senior staffer for about three months for the year-end audit. And, of course, the audit team manager would be on-site pretty regularly during the year and almost constantly at year-end, with the partner on the account regularly shadowing the manager. When John joined the firm, his manager on both of these accounts was Joe Trumbell. Everybody liked Joe—he was truly the “average Joe”—a hard worker; an honest, caring guy who got along with his superiors as well as he got along with those who worked for him. John felt like he struck gold when the firm assigned Joe to become his mentor in those early years.

When they were not working late, Joe would occasionally take John to dinner and the two would debrief about work, talk about preparing for the CPA exam and about managing both his career and personal life so as to strike that “work balance” everybody was always talking about. On the job, Joe carefully walked John through important details of his work—reviewing the importance of auditing receivables at a client like Videonics or staying on top of inventory and sales at Seedman's. John always felt he understood why he was doing what he was doing, and much of that was because of Joe's careful management.

Although several first-year staffers were frightened of the partners, John even liked the two partners with whom he worked most closely. Sarah Cooper was a meticulous, fast-thinking, seasoned veteran in her early fifties. When she visited her audit team in the field, she was always very efficient—she was never there for more than two hours or so at a time, and most of that time she was with the client. But she did a good job connecting with everyone on the team when she was there—even if it was just to check in, say a few words, and make sure everyone was doing okay. Every once in a while, Sarah would individually meet with members of the team and ask questions about their work. John appreciated her inquisitiveness and never felt like she was quizzing him, but always felt that Sarah wanted to make sure John was seeing the big picture.

Ted Brixter was one of the oldest partners at the firm—he was famous for his striped ties and matching suspenders. “Mr. Brixter,” as he was affectionately called by those around him, was highly regarded in the field—he passed the CPA exam on his first attempt, he had made partner at 35—earlier than any other in the history of XYZ—and, despite his fame and reputation, John appreciated that he, like Sarah, seemed to show a genuine interest in his audit team members. When John wrote up a particularly strong control memo on one job, Mr. Brixter pulled him aside and told him so. When John was assigned to a new account during his third year, Mr. Brixter personally called him up and told him he had requested John for the job. When John announced his engagement to his girlfriend of three years, a few of the members of the firm took him out for drinks one Friday after work—John was both surprised and heartened when Mr. Brixter showed up to buy a round for the crew.

That was a long time ago, John thought to himself as his car sped through a yellow light and into the industrial park that housed Seedman's headquarters. John had now been with XYZ for more than 10 years; his days seemed to get longer with every passing year, and the workload got greater and greater. He did not see Joe outside of work as much as he once had, although the two still tried to get to dinner from time to time and last summer went to a Red Sox game. And although as a senior manager at the firm, John was certainly working more closely with partners like Sarah and Mr. Brixter than he had ever been, even they seemed a bit more distant.

As John charged through the double-entry doors of Seedman's office, and flipped a wave at the entry way attendant and headed down to the audit room on the first floor of the building, he glanced at his watch: 7:45 a.m. He hoped he would be able to get in a quick meeting with Joe and Kelly Green before the rest of the Seedman's audit team rolled in around 8:30. John had been bouncing back and forth between Videonics and Seedman's during most of busy season and trying to get in visits with a host of other non-public accounts as well.

The Plot Thickens

“Hey John,” Kelly greeted him as he entered the audit room. Her smile was pleasant but tired. “Want a bagel?”

“No thanks, Kell.” John rested his bag on the table.

“How goes it, buddy?” Joe asked as he playfully nudged him and sat down beside him.

“Good, good … how are things here?” John asked as he reached for the coffee cup Kelly offered him.

“We're behind on some of the 404 work. We're still waiting on some requests from the client, but Kelly says she's hopeful the team will get them today. She tells me you guys will work late tonight to try to make up some time.”

“Absolutely,” John responded. He glanced at Kelly with a half-smile. He knew she knew they needed to put in the extra hours and also knew she was not happy about it. And neither was he. The budget for the account was tight, and neither one of them wanted to blow the time allotment nor did they look forward to spending another night at work.

“I know you wanted to talk about some other stuff, though, this morning,” Joe prodded John. “I was talking things over with Kelly a little bit, trying to give her some insight into what you and I have been talking about.”

John smiled again at Kelly. She smiled back, a little nervously, but in a way that signaled to John she understood. As her mentor, John had gotten to know Kelly pretty well since she came to the firm out of college four years ago. Kelly was smart, good with clients, and had a tendency to see the big picture better than most on her level—and John thought the partners noticed that, too. When Joe and he had first started discussing the partners' concerns about staff behaviors, Joe suggested this meeting with Kelly. Both Joe and John saw Kelly as someone who might provide some insight into what she was seeing around her—as a senior staffer, Kelly still had her ear to the ground and had a good sense of what younger staffers were thinking and doing.

John began to review for Kelly several of the situations the firm had learned about. The first included a staffer with whom Kelly had worked on another client. The previous summer, the staffer—who had been with the firm for a year at the time—had been warned about surfing the web on the job. Kelly had observed the staffer bouncing around various websites while simultaneously conducting some internal control work for their account. Kelly had lightheartedly suggested the staffer “stop challenging her multi-tasking abilities” and focus on her work task. The staffer laughed it off and continued to surf. Later that same month, Joe observed the staffer doing the same thing and directly—although gently—told her to stop. Two weeks ago, Mr. Brixter observed another staffer on one of his jobs doing the same thing. He inquired with that audit team manager about it, who shook his head and said, “Mr. Brixter, I can't tell you how many staffers I have seen do that.”

“What do you think, Kell?” John asked with interest. Kelly raised her eyebrows and smirked a bit as she began to answer.

“I don't know … when I first saw it, I didn't think much of it. I can't tell you how many times I have been on a job when a manager will give us the scores from ESPN.com. So I guess I didn't think it was that big a deal. But when I saw her on eBay and instant messaging with her friend while she was doing the control work for that account, I was pretty mad. I mean, the manager on that account had asked me to supervise all of the control walk-throughs on that job. If she blew it, I was going to hear about it.”

John and Joe exchanged looks. It was true, both had worked alongside managers who checked box scores online and John remembered once even seeing one of the seniors working under him check his fantasy league baseball team online while on the job. Perhaps it was done from time to time and no one paid much attention to it, but it seemed to John like it was happening with greater frequency these days.

Joe jumped in, “I hear what you are saying, Kelly. You were troubled because you saw that person's work as your responsibility. Big picture here—everyone's work on the team is the manager's responsibility and then my responsibility as partner—that's really why John and I are concerned about this. These things always have consequences. Even if this staffer didn't make any mistakes on her control work, she certainly was working less efficiently than if she had not been surfing at all. And that hurts our time budget.”

“Yes—that's true. Actually, in that way, it's the same thing as what happened last month at Videonics,” Kelly was referring to the next situation John was going to mention. This situation centered around one staffer going to pick up lunch for the team and returning to the job an hour later.

“What do you think was going on there, Kell?” John asked. He knew Kelly thought this situation was ridiculous. She had known the person involved here for the past three years—the staffer joined the firm one year after Kelly—and she had openly shared her displeasure with him to John.

“He clearly was taking a break,” Kelly responded. “Have you ever noticed he always volunteers to pick up lunch? And even when he's just running down the street to pick up pizza, I see him come back with gum and candy—stuff you don't get at a pizza place. It's like he uses the time to blow off work and hides behind the excuse that he is picking up lunch to do so.”

Joe followed up, “Sarah Cooper was telling me that she placed an unexpected visit to one of her jobs last week and found that the senior and the staffer were not at the client site when she arrived. It was mid-afternoon—an odd time to be away—so she called the senior on her cell phone. No one picked up. Sarah said she waited in the audit room for about an hour doing some work for one of her other jobs and then spent about an hour with the client. Sarah didn't mention to the client that she couldn't find her audit team—she was hoping the CFO didn't mention anything to her about it—and she returned to the audit room afterward to find both the senior and the staffer back in the audit room working. When Sarah inquired with them where they were, they replied that they had stepped out for a short time to get a coffee. She didn't press them on it, but clearly felt they were lying. Two days later, she heard from the manager on the job (who was away from the client at the time) that the senior and staffer had been getting in some Christmas shopping after lunch.”

John shook his head. Kelly did the same while smiling. “It is hard to do this time of year.”

“What's hard to do?” John asked her.

“Christmas shop,” she replied. “You said yourself you haven't even started and with working late tonight, you're probably not going to make any progress today.”

John nodded.

“What about those two I heard about on the Husky Hands account?” Kelly asked. “Were they really using the client's gym during the day?”

“It would be funny if it weren't so crazy,” Joe nodded and said in reply. “To hear the client tell the story, the gym is for client employees only, but they keep the door to the gym open all the time. Our guys were on their way back from lunch and they stroll in there. One starts messing with the treadmill, the other gets on the bench press. Luckily, the CFO is a pretty easy-going guy. He saw them, made a couple of jokes, and escorted them out, but when I spoke to him, you could tell he was upset. I guess two of the client's payroll people had spotted our guys doing this sort of stuff for about a week and complained to the CFO about it. The CFO said his people sometimes feel our guys strut around the office and take the place over.”

“I'm sensitive to that. We do spend a lot of time out at client locations and sometimes we have to be more careful about what we do and say there,” John offered.

“Hey, Kelly—were you there when John Roper went on his tirade about vacation time last month?”

Kelly smiled. “Yep—I was there.”

“What happened?” Joe asked.

“John came to work that day pretty upset,” Kelly responded. “The night before, he found out that HR had chopped up all of his vacation requests for the spring into one day here and another day there. He wanted to take a week-long break in April to go golfing with his brother down in Florida and another in June for his sister's wedding in Phoenix. Sarah Cooper assigned him to the Johnston Carpet audit, which had inventory during the golf week and also happened to have some important quarterly work for him during the June week. So John ended up getting two days for his golf week and two days for the wedding week. He was pretty upset and called HR from the audit room to tell them he wanted a full week at Christmas to make up for it. Of course, that wasn't going to happen—we are pretty booked around that time here. So John was really ticked. Somehow, Brian Hackey—the controller here—even found out about it. Brian grabbed me in the hallway and asked me why I would work for a “sweatshop” like XYZ. He was kidding, I think, but it was clear John had been telling him how hard the firm works us.”

John and Joe exchanged looks of frustration before Kelly continued. “To be honest, I didn't completely blame John. We are supposed to get five weeks of vacation, but I have never seen mine.”

“That's always been the case, though,” John shared. “I remember sweating out whether or not I would get two weeks for my honeymoon approved.”

“That's crazy—you worry too much. That was your honeymoon!” Joe replied.

“But this was his sister's wedding—and it was a bit of a trip,” John responded.

“Exactly,” Kelly said. “And John put the request in well in advance. It doesn't seem right. The reality is that it's hard to take time off here—I get that—but it's a bit disingenuous for the official vacation policy to be five weeks and for us to realistically only be able to get half that time if we're lucky, and usually then it's not even in solid blocks of time.”

“As John said, though, rightly or wrongly—that has always been the case. Why are we seeing such a spike in such outlandish behavior now? John mentioned that another staffer was complaining about the firm to someone here at Seedman's. You know who we're talking about, Kelly—she's been on staff for two years and is otherwise a very good employee—but for her to tell the client she wants more money and is thinking about going to another firm is a little troubling.”

“I'm with you—she shouldn't have done that. But I can see how it happens. Again, we often work alongside client-people closer than we do others at XYZ and we talk about all sorts of stuff with them—work, personal life—all sorts of stuff. It's only natural we get into some of those things. And there is a lot of that sentiment around here. People feel like they work really hard and the stress can get pretty high and they wonder why they shouldn't entertain offers from other firms to do the same work for more money.”

“But all of the firms are working hard—that's the nature of this industry—always has been,” Joe responded.

John nodded but added, “But I think Kelly is on to something. It has always been a demanding field, but it seems like it's gotten tougher in recent years. Kelly—do you think there is something underlying all of this? The partners are pretty concerned about these sort of behaviors and—as Joe mentioned—while we have seen some of this stuff before, it seems like it's getting worse and we're all trying to figure it out. Can you put your finger on it?”

Kelly leaned back in her chair. It was 8:23 and through the glass doors, she could see the two other members of the audit team making their way down the hallway toward the audit room. “I don't know. I haven't been here all that long but I have seen a lot of this stuff for a while. Not everybody is excessively surfing the web or complaining to clients about work stuff, but a lot of people are doing something they probably shouldn't be doing. The thing is, nobody seemed to think much about it before.”

Joe smiled at the two staffers as they walked into the audit room. He thanked Kelly and leaned into John, “Let's talk again later.”

The Next Day

John only got home around 10:00 p.m. that night and had to run into the office the next morning before returning to Seedman's. He was making his way through the sea of cubicles on the main floor of XYZ's Boston office when he bumped into Connor Patterson. Connor started with the firm the same year as John—his ascent up the ladder had been a bit slower than John's, but he had just been promoted to senior manager. John liked Connor—when the two of them first started, they used to organize basketball games after work with the rest of their “class” and enjoyed occasionally rounding up the crew for a drink or two on Friday. These days their interactions were less frequent and usually pretty quick “run-ins” in the office just like this.

“John!” Connor greeted him. Connor's voice was raspy and it sounded like he was coming down with a cold.

“How are ya, Connor?”

“Pretty good—I actually had a contract question for you on the Latham-Wexlo job. You were on that a few years back, weren't you?”

“Yeah—that's a good account. Those defense contracts can be tricky, though,” John replied.

“You're telling me! I was here last night trying to get through last year's work papers. I'm rotating onto the job and I can't make any sense of the notes in there.”

“Who was on the account last year?” John asked.

“Stewart Cross,” Connor rolled his eyes in reply. “And you know what that means.”

John knew Connor and Stewart were not too chummy. Stewart joined the firm their year as well and found himself on a lot of jobs with Connor that first year. The two of them got along at first, but Connor's nose got out of joint after the first round of performance appraisals came out. Connor felt like his time utilization that year—the firm's measure of his assigned time as a percentage of his total work hours—was among the highest in the office and it probably was; John remembered Connor's being around 95 percent. Connor had also worked a lot of overtime that year—somewhere around 200 hours. When the partners got together to do performance appraisals at the end of that year, they continued their practice of comparing “same-level” staffers based on a series of metrics including time utilization and overtime, as well as more subjective factors like attitude, work ethic, and contribution to the firm. The partners then rank ordered same-level staffers, came up with an individualized rating for each of them, and based annual bonus payments on these ratings. The night performance appraisals were given out to staffers that year, the crew went out for drinks. After a round or two of drinks, Connor found out that his bonus was lower than Stewart's. It has never sat well with him and the resentment has festered over time. To this day, Connor and Stewart do not really speak much, but the two do plenty of talking about one another.

“I heard Stewart's trying to get his cousin a job here. I hope it doesn't take the cousin five shots at passing the CPA exam like it did ol' Stew.”

John did not have time for this today. He tried to signal his busyness. “I have to head out to Seedman's. We were there late last night and we've got a lot of ground to make up.”

“I hear you—same here. Hey—did I hear you are talking to Joe about the up-tick in cyber-loafing on some accounts lately?”

John gave Connor a puzzled smile. “Cyber-loafing?”

“Yeah—you know, wasting time on the internet. My sister-in-law is a college professor and she researches stuff like that … that's what she calls it.”

John's eyebrows raised a bit as he nodded his understanding. “Interesting … I had never heard it called that before. But yeah—to answer your question—I am talking to Joe about it. He and some of the partners are concerned about it—as well as some other stuff that they think is hurting the firm.”

“Well, I've got a story you can add to the list—I actually had one staffer working for me at Latham-Wexlo last week who was chronically online. She wouldn't quit—she was trying to be sneaky about it, but I caught her several times one day. It became an obsession of mine—I couldn't stand the fact that she kept going online. Finally, I reached across the table and yanked her internet connection out. I was livid and she stormed out of the room. I guess she was, too—I heard from HR the next day. She complained to them and was reassigned to another account. I sort of got the feeling from HR that I was to blame, but that's ridiculous. Anyway, I was telling my sister-in-law about it over Thanksgiving. She has heard all about this stuff—says it's getting to be a real problem within organizations. It's hurting productivity.”

John shook his head in dismay. “Yeah, probably hurting more than productivity. The partners think it's hurting our ability to keep our eye on the ball and effectively audit our clients. Mr. Brixter complained last week that our work papers seem generally less thorough these days.”

“Do you think there is a connection?”

“I don't know. I'm not sure—there are so many things going on these days, it's hard to tell what is affecting what,” John replied as he positioned to turn toward the door and say goodbye to Connor. Before doing so, he turned back.

“Hey, Connor—do you think I might be able to contact your sister-in-law? She may be a good resource as we try to flesh this stuff out a bit more carefully.”

“Absolutely. I'll shoot you her contact info through email today and give her the head's up you may contact her,” Connor replied.

“Thanks, pal. I'll talk to you later,” John said as he headed down the hallway toward the office exit. Just then Martha Porter, the director of HR in the Boston office, poked her head out of her office and called to him, “John—do you have a minute?”

He did not, but he smiled and entered her office. She could see he was busy so she got right to the point.

“It happened again. We have another reimbursement request and the receipt is less than reliable.”

John stepped closer to Martha's desk where she had already laid out a collection of four different reimbursement request forms from the last week—each from different people. John knew about two of the forms—Joe told him about them; there was a senior auditor who looked like he was trying to get reimbursed for a non-work-related dinner and a second-year staffer who submitted a receipt that looked like it was a bar tab. The other two were new and both from people John did not know. One was from a senior who had been out of town for two weeks and had submitted a cab receipt that appeared to be from the weekend following his return to Boston. Another was from a staffer who submitted a hand-written receipt for a meal. What struck HR strange about this second request is that the staffer was “in town” at the time, had not appeared to be working overtime, and none of the other members of his audit team had requested reimbursement that day or even that week.

John thanked Martha for letting him know and darted down the hallway out the door. On his way to his car, John dialed up Joe Trumbell on his cell phone. After bringing Joe up to speed on the latest developments, he asked Joe for some clarification on something.

“Has there been any pattern across any of these behaviors in terms of type of perpetrator?” John felt funny using the word “perpetrator,” but he could not think of a better one to use.

Joe responded quickly. “I know—I had been wondering the same thing. Unfortunately, it's not that easy. All sorts of employees are doing these things—very new staffers, those who have been here a little while, even some seniors, those who have been considered strong performers in the past, those who are ‘middle of the pack,' and those who are weak. It's a pretty broad cross-section.”

“Hmmm … that's troubling,” John responded before hanging up and telling Joe he would see him later that day.

An Interesting Phone Call

It was two days later when John decided to place a call to Cynthia Patterson, Connor Patterson's sister-in-law. John had done a little hunting around online and found out that Professor Patterson had published several articles on the specter of workplace misbehavior and had even recently published two such papers that explained how such behavior was impacting accounting firms. Only the abstracts had been published online and although he was trying to get full copies of each of the articles, he had not yet read them but was interested to learn more. He found a private cubicle in a tucked-away portion of the accounts receivable office at Videonics and dialed up Professor Patterson's office number. As the phone began to ring, he wondered what exactly he would find out. The phone rang three times and just as John was prepared to hear the voicemail click in, a woman's