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

2065 Words Mar 26th, 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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State boards major focus is assisting perspective CPAs in receiving their license and disciplines CPAs that practice illegal accounting procedures. State boards do not deal with illegal procedures of a company or their senior executives.
Even though the bank was neglect by accepting the first quarter financial statements and continuing funding the line of credit, without the bank commitment letter signed by the caller; I do believe that the caller has some type of responsibility to report this fraud to the bank involved. As a controller of a company, it is the caller job to ensure that all financial statements are in fact accurate before submitted to a third party. But, if the caller did notify the bank and it later turns out that the caller assessment of the situation was inaccurate and there was no fraud committed, the caller could face severe consequences. For example, if the caller’s accusation were inaccurate she could be terminated from her employment for disclosing false information to a third party. Moreover, the company could sue the caller for attempting to ruin the company’s reputation.
Besides, I do not believe it is the caller responsibility to notify any other third party except to the bank about the situation. I feel this way, because I believe the controller of a company should not have to do perform the duties of an external auditor. An external auditor

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