Question

Memo Form 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

West States Oil Co.

11^th April,2018

To: CFO

From: xxx

Subject: Violation of AICPA Code of Professional Conduct

The Principles of Professional Conduct (2.000.020 Ethical Conflicts) clearly state that if the member discovers or suspects any fraud in the entity, he shall first take necessary steps to support his suspicion or discovery and to acheive compliance with the rules and law. He shall not report the fraud without certain necessary actions on his behalf as this would violate the member's responsibility to uphold the confidentiality of the entity.

He shall weigh several factors to determine his course of action when encountered with such ethical conflicts. The factors could range from external to internal viz. Applicable Rules and Law, Internal Procedures, Ethical Conflicts etc.

He shall be prepared to justify his actions, performed as appropriate for compliance with applicable rules and law. Before pursuing any course of action, the member shall consult with the appropriate person of the entity. He can also consult other individuals for help in reaching a resolution or for advice from appropriate professional body or legal counsel. He shall document the substance of the issue, parties discussed with or involved and details of discussions and resolutions reached.

But, as Kermit D. Frog, Chief Financial Officer, has not acted in accordance with the applicable rules and law specifically, in discussing the issue with any appropriate person of the entity or any legal counsel. He is in violation of the AICPA Code of Professional Conduct. He violated his responsibility to maintain the confidentiality of his employer.

Good Luck