Question

A company for which the majority of shares are owned by a family appointed you as the Finance Director. After some financial difficulties, a bank and a venture capital firm have invested and acquired over 33% of the shares, but no Board of Directors (BOD) meeting was held concerning the matter. The Bank and Venture Capital firm will continue to support the company financially depending on the company’s achievements and performance. You have been told that if you record the “right” numbers, you will receive a large bonus and be awarded 1% of issued shares as share options.

The company is secretive with as little information as possible being given to the auditors and the investors. You believe that some accounting numbers may be being ‘massaged’. You have tentatively raised your concerns with the father and son, the Chairman and Chief Executive, respectively. You have been told that if you pursue the matter or fail to report the ‘right’ numbers, you will lose the bonus and share options.

Explain how you can avoid your financial interest (personal interest) influencing your professional judgement?

Answer 1

Being the Finance Director of the Company, it is his moral responsibility to prepare the accounts of the Company on the basis of True and Fair view. Also it should comply with the Accounting Standards and Legal laws.

The Bank and Venture Capital Firm have invested in the Company and will continue to support the company financially depending on the company's achievements and performance. So, it is very important for the Company to record the actual numbers.

Moreover, Personal interest of any Employee should never override the professional responsibilty for the company.

Hence, the Finance Director of the Company should report the actual numbers and not the 'right' (massaged) numbers just in lieu of his own personal interest of receiving large bonus and share options.