Question

4. You are the new controller of a large local business and you discovered that your predecessor, who was the owner’s son, had been improperly recording expenses to reduce the business’s tax bill. You estimate that, when corrected, the false expenses will cause the company to have to repay several million in back taxes. This will likely cause the business to file bankruptcy and cause around 200 people to lose their jobs. When you present this information to the owners, they will ask you to help them make the fraud disappear. They promise it won’t happen anymore, but they don’t want junior to go to jail, the lost jobs, and the business to fail. Which of the standards will be the most relevant to solving this ethical dilemma? Select all that apply. a. Competence b. Integrity c. Confidentiality d. Credibility

Answer 1

Answer- Confidentiality

• In this case, keeping the information of junior is all about confidentiality regarding expenses issue for the corporation as they don't want him to go for imprisonment.
• But as a controller we can modify the mistakes done in past years for expenses manipulation in order to avoid tax liability. So that client will get accurate financial reports.
• Hence liquidity problems and bankruptcy situation can be avoided.

Thank you! All the best for your exam!