Question

Catherine Sprauer submitted her resignation to Fletcher Anderson in late January 1993. Among the reasons Sprauer gave for her resignation were serious doubts regarding the reliability of the company's inventory records. Anderson insisted that Sprauer not tell him why she believed those records were unreliable because he wanted to avoid testifying regarding her concerns in any subsequent litigation.

"Anderson insisted that Sprauer not tell him why she believed those records were unreliable because he wanted to avoid testifying regarding her concerns in any subsequent litigation. "

What concept does this action describe? Is this action legal? In your opinion, is it ethical?

Answer 1

Anderson insisted that Sprauer not tell him why she believed those records were unreliable because he wanted to avoid testifying regarding her concerns in any subsequent litigation: -

Anderson insisted that Sprauer not tell him why she believed those records were unreliable itself says he knows all the facts about inventory records and doesn't want to disclose it to him because he wants to play safe and doesn't want to get involved in this case.

Knowing something and ignoring the same is a crime. While performing duty if anybody finds something suspicious they should report to their seniors and if they also ignore or doesn't take any action then we should move to Audit Committee and place all the facts before them.

Mr Anderson wants it to continue with inventory records misstatement and he may also have vested interest in the same. Reporting to appropraite authority and investigation would lead to justification for the same.

Here, Sprauer must also act smartly in the situation and should state all the facts of the inventory records to the Audit Committee.

Legal action can be taken against Anderson as he knows everything and still doesn't want to testify about inventory records. His action is unethical and all the necessary actions should be taken against him and extra efforts should be taken to correct the inventory records.

Sprauer facts should be appreciated by the organisation and higher management should request her to stay as she was honest in the situation and helped organisation to overcome this suspicious transactions which would lead to fraud in future and organisation goodwill would be hampered.