Professional ethics stipulates both the personal and corporate behavior expected from a professional. This includes among others honesty, transparency, and integrity. Carlos time keeping in the company Logbook is dishonesty and not inline with professionalism. In the eyes of an accountant, being a director in the firm, Carlos might have used the rounded off time if the company had the company made profit. This leads to another question were his actions malicious? Lau is a full time service director while Carlos is an executive director-(non-full time director). This means that time that he spent on the business is vital in tax returns.

On the use of the rounding off effect in recording of his time spent in the company, Carlos is unethical where his partner does not know. However, where the company rules stipulate that then it will be unethical on the company professional standards and guidelines. This might not or might be on the standards set forth by the IRS in the tax code.

According to IRS, there are three exception to a limited partner, that "the taxpayer works 500 hours or more during the year in the [business]", taxpayer in a material sense took part in the business activity in any 5 of prior 10 years and that the activity is a personal service (IRS, 2004).In the test of 500 hours, Carlos fails as it is evident that he did not work up to or more than 500 hours. Thus, according to IRS Carlos fails in this test thus unethical.

Besides, IRS provides for no estimates in its standards, business may make such estimates and count them ethical. Even where the body was to require time schedules, it would not accept false and estimated schedules. It is thus unethical in all respects for Carlos to make falsified time schedules and estimates.