Anonymous Caller Auditing Case Study

Topics: External auditor, Audit, Auditing Pages: 4 (1027 words) Published: February 17, 2013
Anonymous Caller Case Study

1 a) What would you recommend to the caller if you were Dr. Mitchell?

Since it appears that the firms top executives are all apart of the fraud and don’t plan on correcting their unethical action. I recommend that the anonymous caller completely remove himself/herself from the situation by resigning or by reporting the situation to the firm’s board of directors or a governmental agency.

b) What are the risks of continuing to work with the company?

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 to occur even if she/he had nothing to do with the fraud. The caller could potential face jail time, lose her CPA license, or be forced to pay large sum in fines.

c) What are the risks of resigning immediately?

If the bank does find out about the false entries, then they might view the caller’s immediate resignation as very suspicious. And the firm’s executives could just lie and blame the caller for the false entries.

2) What responsibility, if any, does the caller have to report this situation directly to the bank involved? Before you respond, think about the risks present if the caller does inform the bank and it later turns out that the caller’s assessment of the situation was inaccurate.

As an accountant the caller had legal and ethical responsibility to inform the bank about the fraudulent financial statements. If the caller’s assessment of the situation is wrong, then he/she faces the possibility of getting fired by the company.

3 a) What other parties, if any, should be notified in addition to the bank?

Two other parties that should be notified in addition to the bank are the companies’ board of directors and the firm’s external auditors. By contacting the board of directors and external auditors...
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