Case #1 - Advanced Auditing

In: Business and Management

Submitted By robneverforget
Words 634
Pages 3
An anonymous caller seeks help from her former university professor. The caller thinks that the company that he is working for only three and one-half month is committing a fraud. The main reason that the caller is worried is because he is the controller of the company and he has to sign the quarterly statement of his privately-held company. Those quarterly statements are for the bank that his company has the line of credit, those statements have to look good so that the bank approve their credit. There are two big problems in the case. The first one is the as he started on the company he had to sign the closing of the prior fiscal year. If the fraud was being made in the last year, he could be treated like an accessory to the fraud because he signs the statements. The other problem is that the CEO and CFO, the highest in command, are the ones that are committing the fraud.
I would recommend that the caller has to report the fraud to the FASB. The Financial Accounting Standards Board (FASB) has been the designated organization in the private sector for establishing standards of financial accounting that governs the preparation of financial reports by nongovernmental organizations. Those standards are officially recognized as authoritative by the Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants. If the caller continues to work in the company he could get caught committing the fraud and could go to jail. There are two risks if he resigns immediately. The first one is that he already signed the year-end state, and he could serve as an accessory if the fraud was committed that year. The second one is that he could get retaliation for his former co-workers and don’t get work in any other company. The SBA will be a perfect source to seek advice. They are designed to aid and protect the public. The SBA is the perfect…...

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