The Anonymous Caller: Recognizing It’s a Fraud and Evaluating What to Do

2056 Words May 20th, 2015 9 Pages
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…