Pezno wines: The legal and ethical dimensions of “in kind” employee compensation

Barney, recent accounting graduate, was employed as an internal auditor with Slate Financial Services, an investment firm. During his review of one of Slate’s investment properties, Pezno Vineyards, he discovered that the manager of the winery had been receiving substantial amounts of unrecorded wine distributions. Barney found himself in a dilemma. He believed the distributions constituted compensation and should be recorded, but he was a new auditor. If he reported the findings, would he be labeled a troublemaker or even lose his job? He needed this job to pay his bills and loans. As an internal auditor he had professional and ethical responsibilities he needed to comply with. Barney needed to find a solution that properly tracked the income and complied with tax rules without alienating the employee and jeopardizing his job.