The Anonymous Caller: Recognizing It’s a Fraud and Evaluating What to Do
The ethic case study was about an anonymous caller who is the controller of a privately-held, small, start-up company. The company was experiencing a severe cash shortage and was required to present the quarterly financial statements to the local bank, in order to begin receiving funds for the line of credit again. She had concerns that the senior executives of the company provided the local bank with misstated financial statements. The caller was later informed that the accounts payable clerk was instructed to record sales transaction generated by the Chief Executive Officer (CEO) of the company. As a result, the sales and receivables accounts were overstated in the
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For example, if the caller continues to work with the company and is senior executives knowing that they have intentionally committed fraud this could degrade her integrity. Another example, if the company is caught committing fraud her entire integrity reputation could be ruin. In addition, if the company is caught committing fraud her entire company will undergo an investigation for alleged fraud, leading to possible loss of employment. I say this because, when a company in under investigation all employees are investigated thoroughly. If it reveals that the caller knew about the company’s fraud and didn’t report to the proper authority; she could be held responsible for not coming forward beforehand.
However, if the caller decides to resign from the company immediately there are also a few risks. One risk of resigning immediately is that if she does so, she will not be able to collect proof showing the senior executives illegally increased their sales and receivable accounts in the financial statements by recording transactions that had not yet took place. These supporting documents can be extremely important and helpful if the company tries to direct the blame towards the caller for the improper accounting practices. Another risk of resigning immediately, is that she will be unemployed temporarily, due to the fact that she more than likely do not have another job to replace this one.
I do not believe the State Board of Accountancy
Shaw, W.H. (2014). Business ethics: A Textbook with cases, (8th ed.). Boston, MA : Cengage.
Ethics and moral obligations are issues we all encounter at one time or another. In the professional setting, all people should act in a manner that would uphold the good of society. To be ethical, one has to determine their obligations, moral ideas, and moral philosophy (Boatright, p. 19, 2009). The case analysis involving Jacob Franklin was a perfect example of how an individual can face the dilemma of doing what is right or wrong. Businesses have their own code of ethics, and the employees within the business have to determine whether or not they will follow the company’s code of conduct. I will discuss several ethical issues in the case analysis including; failure to report information, remaining silent regarding faulty equipment,
Financial reporting practices and ethics have manifested an ocean of literature. This has mainly come from organization theorists that address accounting practices. These theorists and professionals have given fresh accountability measures. Their ideals give this industry the tools needed to survive, grow and prosper. The way an organization prepares and reports its financial information and handles its daily operations is in essence financial practices, and in the way it accomplishes this reveals their ethical standards to which they adhere to. This paper will discuss the financial practices, ethical standards, and
According to Harvard Law School’s article, approximately two-thirds of companies in the U.S. are affected by fraud. However, whistleblower Hotline can be as defense against management overrides. The article noted that whistleblower could be more effective if it become as apart of the corporate compliance programs and a reward of any monetary sanctions collected to motivate the employees Also, the article mention that the employees
As an assistant controller of Linbarger Company, the accounting problem I currently face is being ethical in financial reporting. By not maintaining a $200,000 cash account balance, per month, as per the agreement with our insurance company, we are at risk of defaulting on our loan. It has been suggested by the financial VP, Lisa Infante, to account for funds not received. This presents an ethical dilemma for me as well our company. If I account for these funds we meet our cash requirement however, the reporting isn’t accurate. If I don’t our company is at the risk of being shut down and everyone losing their job.
The problem to be investigated is the application of business ethics. In the business world, ethics are extremely important. Ethics are prime elements that help a business to grow and to become more productive. It is by applying proper business ethics that a business can operate in a moral or ethical business environment and managed to conduct all activities in a manner that maximizes profits while not compromising all other non-economic concerns(Schwab, 1996). Businesses have over the years failed to nurture business ethics in order to fulfill shareholders' interests and to have a culture that is oriented towards profit maximization and high performance(Jennings, 2012; Sims & Felton, 2006). This has led business to have gray areas in their activities. Gray areas are those situations or problems that do not fit exactly into any ethical analysis. These are the activities which may be represented to be immoral as a result of lying and false representations on the part of the business.
This study aims to understand what effect has an ethical framework in accounting. In particular, we examine the influence of ethics on earnings management, financial reporting, and external accounting. Today, the commercial environment reveals the unethical behavior of management and accountants through the manipulation of accounting records to boost the company’s stock price, falsified financial statements to mislead investors, failure of auditors to correct errors and omissions due to client’s pressure and personal material interests.
Some industry-specific factors, such as having valuable near-cash assets, can increase the organization's vulnerability. Also they will need to rationalize the actions as justifiable. The individuals committing the fraud must first convince themselves that their behavior is acceptable or will be temporary. For example, Barry Minkow’s believed that the lies and deceit are for the betterment of his company and that with time everything will eventually return to normal.
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Ethical issues have greatly transformed in our lives since the great Enron, Xerox and other huge corporations proposed big profits showing earnings of billions of dollars and yet in reality facing bankruptcy. These corporations faced great trouble with the federals and state for manipulating financial statements. But not only corporations can be blamed on this, accounting firms were involved in this as much as the corporations were. With the business stand point, ethics comprises of principles and standards that guide behavior. Investors, traders, customers, and legal system determine whether a specific action is ethical or unethical. Ethical issue is a vast subject, but we will look at the niche
There are many risk involved with staying with the firm. If the caller decides to stay with the company and the bank finds out about the fraudulent entries, as the controller of the company, the caller would take most of the blame for allowing the fraud
In their personal and professional lives, people can and, unfortunately, sometimes do go against their moral and ethical standards. Ethical standards are what it means to be a good person, the social rules that govern our behavior. Ethics in business is essentially the study of what constitutes the right and wrong or the good or bad behavior in the workplace environment. A business is an organization whose objective is to provide goods or services for profit. The organization has a group of people that work together to achieve a common purpose. The moral challenges that these men and women face each day along with a whole range of problems that could occur, are why ethics plays such an important
2. What measures can and should be taken to make it easier for corporate employees to ‘‘blow the whistle’’ on a fraudulent scheme they uncovered within the firm?
Over the past two years, corporate America has endured a plethora of fraudulent acts committed by those of high status within their respective corporations, most of which involve internal fraud. Internal fraud has two main aspects, misappropriation of assets and fraudulent financial reporting, with the focus of this discussion lying within the former. Misappropriation of assets is defined as fraud for personal gain. It is the most common type of fraud found among employees and frequently includes theft of cash and inventory.