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Unethical Accounting Situation

unethical accounting situation"Finance and Accounting Role is Grey - not Black and White." My boss says "true."

I love my work, but it is now getting threatening because I refuse to concede to pressure from my boss and other senior colleagues to commit corrupt acts against the interest of the company.

I believe in intergrity, responsibility accounting but not creative accounting. Deserving and appropriate reward for my stewardship are still one of my core values. Friends, this is my first job and only source of income for further studies and survival as a graduate. Please, what should I do? I need your advice and support. Thanks


Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

Never compromise your values. There is always a line in the sand and you have to be strong enough not to cross over it when it goes against everything you believe in.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |


As you indicate, this is your first job. I applaud your sense of right v wrong, and would suggest you ask a trusted mentor to help you interpret your situation for you and help you decide. Christie is 100% right on "no compromise over values."

Talking to a mentor would help you determine the true factors that you base your decision on.

Best wishes!

Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

"corrupt acts against the interest of the company"

I'd like to know examples of this. Sometimes theory (what we were taught in school) and the real world practice is so different that we interpret it as "crossing the line". Risks are also taken by upper management knowing full well about the consequences of their actions.

I am NOT saying that you are being naive. But some context and examples will greatly benefit others in answering your post.

Topic Expert
Patrick Dunne
Title: Chief Financial Officer
Company: Milk Source
(Chief Financial Officer, Milk Source) |

The one litmus test you may want to use and to propose to your managers is: Would you want this on the front page of the Wall Street Journal? If the issue is material and would truly embarrass you if it was published, then you and the management team need to re-think whether the suggested actions should be done.

Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

In the world of public agencies, where semi-annual ethics training is required, we refer to that as "the press test".

You'd be surprised how many people feel free to ignore it. That or, they are too dense to understand it. ;-(

Tom Harrington
Title: Chief Financial Officer
Company: Community Bridges
(Chief Financial Officer, Community Bridges) |

If you are routinely being asked to do something unethical and your superiors consider it normal business practice it's time to move on. I have found that once you establish yourself as a person who has high standards both ethically and in your work product it will be rewarded over time. The folks at Enron compromised.

Chris Holtzer
Title: Senior Manager - Strategic Analysis
Company: Sargento
(Senior Manager - Strategic Analysis, Sargento) |

I am in agreement with others, that you should never compromise on ethics. If you don't think it's right, then don't do it, but be sure to express to your leader(s) why you object. Personally, I have the utmost respect for the people engaged enough to disagree with me. It shows passion, integrity, and that they are thinking about what they are doing rather than just executing a pattern of activities. I am not perfect, and knowing they are keeping me in check is some how comforting. The worst outcome would be a team of blind followers. Perhaps your leader hasn't viewed the issue from your perspective. Or, perhaps you haven't viewed it from his/hers. There is no reason you can't have a healthy debate with your leadership, especially about this subject. In most cases, unless laws or GAAP are violated, it is gray, so make sure you have a well rounded perspective before jumping to any conclusion.

If that doesn't' work, next, I would recommend evaluating who is asking you to do things you aren't comfortable with. Even if you are told it is coming from the top,verify that personally, as high up as you need to go. While it should be a last result, you do have the option to go around your immediate leader, up the ladder. Everyone in the organization has a fiduciary responsibility to the company. Not stopping unethical behavior, is in itself, unethical. It's not impossible, but I'd find it highly unlikely that multiple leaders within the organization would cohort on a truly unethical action. In my experience, the unethical stuff is normally someone trying to CYA, instead of taking their lumps and moving on. In today's world, leaders are more than aware of the substantial consequence, personally and professionally in this area. If the leaders are conspiring, severance is probably the best outcome you can hope for.

The market is pretty good for finance and accounting professionals right now. Don't be afraid to do what is right. I know first hand unemployment is scary as heck, but an ethics ding on your record will render your degree and work up to this point null and void (at best). It's not worth the risk.

Edward Thill
Title: VP - Finance & Operations
Company: Performance Trust
(VP - Finance & Operations, Performance Trust) |

There is a lot of grey in the accounting world so first be sure that you are solid in your position that something crosses the line into black. Research the accounting rule and be prepared to support where you are being asked to violate ethics. Have that discussion with your supervisor and allow them to address and counter your assertions. Frame it as a learning opportunity for you ("It seems ..., what am I missing?"). You may learn that there are other interpretations to the rules that are equally acceptable. On the other hand, if your research is dismissed without rebuttal and are simply told to follow orders, you're probably working for the wrong people because either:
- they are aware that they are approaching/crossing ethical lines or
- they believe their actions justified but don't think enough of you to invest the time to teach you the difference.

(Agent, JKS Solutions, Inc.) |

Take it up a level to your boss's boss. They will appreciate your candor, however they may not keep it confidential so be careful about what you say, be sure you have proof. The alternative is to call your whistleblower hotline. If you are a CPA, follow the ethics guidelines about reporting to appropriate levels of upper management.

Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

In CA, whistleblowers have little realistic protection from retaliation. In fact, they've been prosecuted along with the perpetrators due to their failing to have refused, resigned and walked away before blowing the whistle.

I have a great, legal white paper written by a local, employment law attorney and published in the state trades paper about this topic around here somewhere.

I've spoken with her in the past about ethical issues I faced and her advice was to move on; to find a new employer although she was completely sympatico with what was going on as being illegal. She wasn't afraid to tell me that, as an unprotected class employee, my case wouldn't be that strong when my employer started retaliating against me as they were sure to do.

(Senior Controller) |

I can appreciate the dilemma that you find yourself in. And, I agree with what all others have posted here regarding compromising your ethics.

An example may help. I had a situation many years ago in my career where one of our SVP's was filling in for our President while he was on an extended vacation. It was quarter end, and we were preparing variance reports for our parent company. The SVP came to me and asked that I modify the method we were using to estimate returns to show a more favorable number. His perspective was the they are only 'estimates' anyway.

After explaining to him how our methodology had evolved over the years; he remained insistent.

So, I suggested that in our variance report, we would highlight the fact that the method of calculation was inconsistent with prior reports and with the way that our budgets had been prepared based on the judgement of this particular executive. Only under those conditions would I consider modifying the basis of the calculation.

Needless to say, the executive rescinded his request.

Philip Russell, CPA
Title: Chief Financial Officer
Company: FCB Homes
LinkedIn Profile
(Chief Financial Officer, FCB Homes) |

There are other jobs.

It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.Warren Buffett

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

I like the approach Anon suggests, if they insist at least make it be known that the valuation was modified. At least no-one can come back on you so you are doing as you are being told to do but also protecting yourself.

(CFO) |

Wrong Christie.

Too many times I've seen someone trying to be upright made out to be the fall guy when the s**t hits the fan, despite they're having tried to CYA as you suggest.

Even if it exposes the wrong doer, seldom is he/she shown the door. So, one is left working in a position vulnerable to the shenanigans of the higher up they've exposed. That usually doesn't end well for the innocent one.

It's all about power. And despots will do whatever they can to hold onto it.

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

While I am sure that happens sometimes, would you say if you were terminated for doing the right thing that would be held against you when seeking employment?

(Director Financial Reporting) |

I agree with Christie, Wayne, Chris and Emerson. Although companies and people change over time, and circumstances can place unforeseen pressure, such situations will be far less likely in organizations that have a culture of integrity and less illogical external pressures. One takeaway is to ensure your own values and ethics line up with that of your organization before taking a role and also being aware of open door and whistleblower policies in case such situations arise.

One could naively hope that events over the past decade involving such people and organizations as Tyco, Worldcom, Enron, Conrad Black, Bernie Madoff and many more would be sufficient to eliminate such situations. Apparently this is not the case, which likely doesn't surprise any of us.

Lyle Newkirk
Title: CFO
Company: Corrigo Incorporated
(CFO, Corrigo Incorporated) |

It looks like everybody agrees that you should not compromise your ethical standards.
The suggestion above that you discuss the situation with an impartial trusted and experienced third party is a good one. You need a different perspective before you make a major career decision. If after third party review you still feel that your ethical standards are at risk, you need to begin looking for another job.

Mark Matheny
Title: VP - FInancial Planning and Analysis
Company: Novolex (formerly Hilex Poly)
(VP - FInancial Planning and Analysis, Novolex (formerly Hilex Poly)) |

I would never put myself in a situation of doing something illegal, immoral, or fraudulent. That doesn't mean there are not gray areas where I have had to move off my position on issues even when it comes to the presentation of data that at first would seem black and white. If you are going to survive in a financial career, you need to learn to make those distinctions. Again, I would never do something I thought would damage my integrity.

(VP of Finance) |

Stay or go? If you stay, you will most likely be faced with similar pressures. I think you should start aggressively looking for another position. Keep your current job until you find another. One positive is that you are in accounting and there are thousands of accounting jobs out there. Every company needs an accountant. Don't be afraid to go. You will be blessed for being an honest and forthright person.

(Accounting Manager) |

It sounds like you are young in your career. Do not compromise your ethics. Move on to another company. You have plenty of options to find a more ethical company given your experience level.

phil Wolhar
Title: President/CEO
Company: PAWCO Enterprises, Ltd.
(President/CEO, PAWCO Enterprises, Ltd.) |

Watch "American Greed." Google Healthsouth CFO's. Remember the CEO expression: "Somewhere in this company is a CFO who can make the numbers I promised the street, and I certainly hope you're that CFO." It's a slippery slope, one indiscretion will lead to another. QUIT! But make sure the CEO knows why. Sometimes these things actually work out for you and if you're good, you can always find another job.

McKay Allen
Title: Assistant Controller
Company: BetterBody Foods
(Assistant Controller, BetterBody Foods ) |

You mentioned this is your first job.. Don't allow it to become your last job.

Jon Schwartz
Title: Controller
Company: Slavik Enterprises
(Controller, Slavik Enterprises) |

Not sure if anyone else has commented with this, but you can consult your auditors, either or both internal if applicable, or external, or consult with in-house counsel if applicable.

You would be surprised how quickly the person putting the pressure on you will change their position if the risk of the issue surfacing up to these levels is possible.

Jeff Tchir
Title: Founder and Technical Advisor, RevRec.NE..
Company: RevRec.NET
LinkedIn Profile
(Founder and Technical Advisor, RevRec.NET, RevRec.NET) |

Yup, don't compromise integrity as that is all you have in the end. In practice, there are (or should be) a variety of avenues available to communicate and escalate one's concerns: one's own management team (boss or boss's boss), general counsel, HR leader, audit committee, disclosure/control committee, and whistle-blower line. If either the nature of the relationships or company structure is such that these things don't exist or are not effective, then it is probably not a good place to be anyway. Plus (I'm not a lawyer and I think it depends on the state), I believe firing someone because they disagreed with or escalated such issues is illegal as it is a form of retaliation.

David Cameron
Title: cfo
Company: trylon tsf
(cfo, trylon tsf) |

Time to brush up your CV and move on. That assumes you are an accounting and business expert.
You did say this is your first job and I did not see any reference to you being a CPA. Therefore, consult with the CFO and do so in a non threatening manner. Sounds like this is just part of your seasoning and development process as a person.

Bruce Petrovics
Title: Consultant
Company: Bruce Petrovics
(Consultant, Bruce Petrovics) |

This type of situation is always. Typically, an accountant may be told to book an
entry (such as debit Restructuring Expense and credit Accrued Liabilities for $1Million) originating with a senior executive who ordered your manager. Ultimately, .the practical non-ethical rationalization is "I have my orders in writing, and that's good enough for me." Of course, disclosure of the economic basis for the entry is strategically secret.
You wouldn't be fired for rattling your manager's composure over this issue every month
end. Here's the downside if your response style is abrasive or counter to the corporate culture, you may have a difficult time in your next performance review. Advice: Do not make any personal phone calls and do not use the corporate email or internet for any personal purpose. If the ethics of the corporate culture is not appropriate and you
cannot find an effective senior official, you might as well look for another job right away. In many companies, you can be turfed during your initial probation period without
any justification.

Suzanne Brooks
Title: Finance Director
Company: Dientes Community Dental Care
(Finance Director, Dientes Community Dental Care) |

I agree- your integrity is all you have.
Be sure of your facts and then get going.
A long time ago I was asked to make the inventory look better with a journal entry. I asked my boss to give me one good accounting reason why. He had no response and dropped his request.
In college they recommended that we find another job and when we resigned to give them a letter listing the unethical requests/activities and to send the same letter to ourselves, certified and keep it unopened for your protection.

Philip Russell, CPA
Title: Chief Financial Officer
Company: FCB Homes
LinkedIn Profile
(Chief Financial Officer, FCB Homes) |

Ask yourself if you want to be part of an unethical culture. There are other jobs out there.

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