Question

Essay #1: Evaluate the scenario using the AICPA Code

Scenario:

Kermit D. Frog is currently employed as the CFO of Weststates Oil Co. He has discovered that the owner of the company has been paying state environmental inspectors cash so that they will not report or charge Weststates Oil for dumping toxic chemicals into the surrounding environment. Upon discovery of this, Mr. Frog immediately reports this to the Attorney Generals Office.

Required:

Analyze the scenario above and explain in memo form why the CFO's actions are or why they are not a violation of the AICPA Code of Professional Conduct, and what you recommend should be done. Please use the corporate memo format, as contained in the General information module of the course and use the AICPA Code or select another appropriate outside source to use and cite in your memo. Please submit through the blue Canvas "Submit Assignment" function in the upper right of this page.

Answer 1

As new provicions were included in the Dodd-Frank Act, the AICPA modified interpretation 102-4 of the Integrity & Objectivity Rule in the AICPA code for including ways & means to be followed by external auditors when they intend to blow the whistle on their audit firms for not acting on resolving the difference of opinion on the relevant matters.

Here there can be specific provisions for an internal employee to be followed.

The Act would lay down the procedure etc. inluding rewards etc. to be conferred upon the whistleblower.