Question

In the discussion of loyalty in this chapter a statement is made that: “Your ethical obligation is to report what you have observed to your supervisor and let her take the appropriate action.” We point out that you may want to take your concerns to others. Do you think there are any circumstances when you should go outside the company to report financial wrongdoing? If so, to what organization would you go? Why? If not, why would you not take the information outside the company?

Answer 1

Whistle blowing has had a bad name since before Rolf chose his duty to Nazi youth over his affection for the Von Trapp family in the “Sound of Music.” Telling to get someone in trouble is called tattling. Tattling often has the bad reputation due its mean-spirited motivation. Telling to get someone out of trouble is usually the right thing to do. The difference in the two situations above turn on motives and has to consider future versus past harms. Whistle-blowing could stop something which is about to happen or will continue happening. It does matter whether whistle-blowing can change the future and it does matter how important those changes are in the lives of those in peril.

Whistle-blowing is different for Accountants because it violates client trust and break promises the profession has made on behalf of each of its members. Accountants, as professionals, have access to truth and knowledge BECAUSE we as a profession promise that clients can absolutely count on the Accountants not to violate that trust by sharing secrets. If the profession did not promise confidentiality and our promise was in doubt, clients would try to get professional accounting services while keeping secrets from their accountants. Alternative services would be weak or poor at best.

While there are situations where Professional Accountants have to go outside their chain of command, the whole profession’s reputation for reliability is damaged whenever that promise of confidentiality is broken. Whistle blowing for a Professional Accountant is promise breaking. The best justification for breaking promises is what we call an emergency: time sensitive, future changing, no one else can do it and it has to be done situations. It is easier to imagine corporations in its personnel, operations and marketing departments doing dangerous and harmful things that must be stopped in a hurry than in the finance or accounting departments.

There are circumstances where future harm to people who deserve our protection is so great that professional duty is superseded by duty as a human being. There are also circumstances where individual accountants are the only one person who can prevent or reduce that harm by acting. Accountants can almost always trust their supervisors to do the right thing and follow up on what needs to be investigated. If there is honesty, diligence, and adequate time to follow the chain of command, whistle-blowing for financial wrongdoing would not be justified. An organization truly corrupt to its top ought to be a stunningly unusual situation, although recent events might suggest otherwise.