Question

I was employed as a certified public accountant (CPA) for a regional accounting firm that specialized in audits of financial institutions and had many local clients. My responsibilities included supervising staff, collecting evidence to support financial statement assertions, and compiling work papers for managers and partners to review. During the audit of a publicly traded bank, I discovered that senior bank executives were under investigation by the Federal Deposit Insurance Corporation (FDIC) for removing funds from the bank.

They were also believed to be using bank funds to pay corporate credit card bills for gas and spouses’ expenses. The last allegation noted that the executives were issuing loans to relatives without proper collateral. After reviewing the work papers, I found two checks made payable to one executive of the bank that were selected during a cash count from two tellers. There was no indication based on our sampling that expenses were being paid for spouses. My audit manager and the chief financial officer (CFO) of my firm were aware of these problems.

After the fieldwork for the audit was completed, I was called into the CEO’s office. The CEO and the chief operating officer (COO) stated that the FDIC examiners wanted to interview the audit manager, two staff accountants, and me. The CEO then asked the following question: “If you were asked by the FDIC about a check or checks made payable to bank executives, how would you answer?” I told them that I would answer the FDIC examiners by stating that, during our audit, we made copies of two checks made payable to an executive of the bank for $8,000 each.

The COO stated that during his review of the audit work papers he had not found any copies of checks made payable to executives. He also stated that a better response to the question regarding the checks would be, “I was not aware of reviewing any checks specifically made payable to the executive in question.” The COO then said that the examiners would be in the following day to speak with the audit staff. I was dismissed from the meeting. Neither the CEO nor the COO asked me if the suggested “better” response was the response I would give, and I did not volunteer the information. During the interview, the FDIC investigators never asked me whether I knew about the checks. Should I have volunteered this information?

1. What would you have done? Volunteered the information or stayed silent? Explain your decision.

2. Was anything unethical going on in this case? Explain.

3. Describe the “ethics” of the officers of the firm in this case.

4. What, if anything, should the officers have done, and why?

5. What lessons, if any, can you take from this case, as an employee working under company officials who have more power than you do?

Answer 1

1. I would have stated all the facts and volunteered the information because it is wrong, the bank is cheating the people, its customers, for some people personal gain, it is against my moral values and I wouldn’t be part of anything like this because sooner or later truth will come out and all of them will face consequences.
2. There are many things going unethical in this case, removing funds from the bank, using bank funds to pay corporate credit card bills for gas and spouses’ expenses, issuing loans to relatives without proper collateral and then the ceo and coo were oppressing the employee , telling him in an indirect way to lie, this is unacceptable and unethical.
3. The bank officers does not believe in ethics, all they care about is money and self-gain, they showcase a disloyal, lack of moral judgement and selfish behaviour.
4. They should have been loyal to their job and had done the right thing when they find out about the fund misuse.

5 Well be true to yourself and morals, the question might not been came up during the interview of fdic, maybe the company officials have bribed the fdic people, but you should had said the whole truth and if the boss is supressing you , quit the job this type of environment is not suitable for work and after quitting the job you should have published the finding over internet and to media.