Question

Essay #1: Evaluate the scenario using the AICPA Code

Scenario:

Kermit D. Frog is currently employed as the CFO of Weststates Oil Co. He has discovered that the owner of the company has been paying state environmental inspectors cash so that they will not report or charge Weststates Oil for dumping toxic chemicals into the surrounding environment. Upon discovery of this, Mr. Frog immediately reports this to the Attorney Generals Office.

Required:

Analyze the scenario above and explain in memo form why the CFO's actions are or why they are not a violation of the AICPA Code of Professional Conduct, and what you recommend should be done. Please use the corporate memo format, as contained in the General information module of the course and use the AICPA Code or select another appropriate outside source to use and cite in your memo. Please submit through the blue Canvas "Submit Assignment" function in the upper right of this page.

Answer 1

Ans:- CFO's action is not a violation of AICPA Code of Professional Conduct because:-

a). Owner of the company was following the unethical practice to bribe state environmental inspectors by paying them cash.

b). Since owner of the company was directly involved in it, so there was no point to discuss it in any management meeting.

c). The issue could also be raised in a board meeting and owner should be penalized for using unethical practices.

d). The CFO has every right to be a whistle blower and act in the benefit of organisation by reporting unethical practices.