During the course of an audit, Fred Curious, the senior, noticed that several employees were paid at a rate less than that required for the federal minimum wage law. He checked into this matter and found that the company was engaged in interstate commerce, which means that all employees are subject to the federal minimum wage law. He decided to tell the company controller, feeling that the violation was probably an oversight and could be corrected easily. However, the controller was irritated when told of this situation by the senior. She informed Mr. Curious that this matter had nothing to do with the audit and that it should be dropped. Mr. Curious took his information to the CPA firm's partner in charge of the audit. The partner showed concern for the senior's feelings but was reluctant to do anything about it. He suggested that Mr. Curious make a notation of the underpayment in his working papers and assured Mr. Curious that, as partner, he would take full responsibility.

Required:

a. If you were Mr. Curious, what position would you take about the partner's suggestions?

b. What position should the partner have taken when he learned of this situation? What action should he have taken?

c. Answer this question without regard for the Code of Professional Conduct. Do you think that Mr. Curious or the audit partner, or both, should take this matter directly to the applicable federal authorities?