Question

Accounting Ethics - Comprehensive Problems

Injured workers have filed numerous workers' compensation claims against your audit client. In reviewing medical exams filed in connection with these claims, you noticed that one of these former employees has a life-threating disease. This disease can be cured by surgery, but the former employee does not know about his disease or about his need for surgery.

You asked your client for permission to inform this former employee about his life-threatening condition, but your client refused. During the course of your discussion, the client told you bluntly that “we will save a small fortune if the former employee has a short life span because, frankly, we will pay out fewer workers' compensation checks.”

Should you reveal information to this former employee concerning his life-threatening disease?

Answer 1

The issue of ethics can be looked at from two sides. First case is to assume that the claim filed is true and honest in all aspects and there is no suspected foul play. In this case , it the moral responsibility of the client to reveal the actual health condition to the former employee irrespective of the cost that may be incurred for it. Just to save costs, the client cannot keep calm on a medical condition that threatens a human being and it most certainly against humanity principles. If the client refuses to do ,as a good samaritan you must certainly reveal the fact in the most appealing manner to the employee and offer help. The other angle here is that the claim can be a fradulent one and employees may be tempted to exaggerate the symptoms to get more money. Here the auditor has to be vigilant to ensure that there is no made up injury or illness to benefit from the compensation policies. If he determines that the employee is indulging in a fraud then there is no ethical responsibility on part of the employer or the auditor.