Case Study: Ethical decisions in whistleblowing
Question One
Based on the fraud triangle, the internal control weakness is explicit of opportunity and rationalization fraud risk factors. The entity lacks end around internal controls as Cathy unable to report fraud implications and incapacitation. Additionally, the city’s senior management is not watching for fraudulent activities within the city, thus amount to fraud actions.
Question Two
Management accountants play the role of fraud and other illegal activities detection and prevention by continuously paying close attention to the practical management basics. It can be achieved through having in place a strategy and measure that allow critical, accurate, and relevant information to be prominently available regularly to reduce the incidences and risk of fraud.
Question Three
Based on the case, I believe Kimberly is unethically booking activities. This is because it makes her solely responding to conducting all booking activities, and thus there is no balance and check for the accounts. Cathy is also unethical by letting her boss perform most of her work and fail to report suspected fraud activities, which may conceal fraud activities within the city books of accounts.
Question Four
If Kimberly is embezzling funds, the city and its worker are affected. If Cathy decides to keep her concerns to herself, the town and its people will be affected as it will lose funds that would be used to carry out its operations.
Question Five
Cathy has three options. First, she should talk to her manager Kimberly and try to reconcile the embezzled account. Secondly, she should report the matter to a higher-ranking official in the city like the City Mayor. Lastly, she informs the city of external auditors for advice on the subject. This will enable her to solve the issues amicably.
Question Six
First, I will use the missing invoices to support the likelihood of fraudulent activity. Secondly, I will use the missing of the appendage of the necessary signatures on the payments made. Lastly, I will use Kimberly’s action of taking Cathy’s responsibilities relating to bookkeeping to conceal fund embezzlement.
Question Seven
First, she should try talking with Kimberly to ascertain the accuracy of her claims skeptically. Additionally, she should try reporting the matter to higher-ranking officials is the case attests out to be fraudulent activity.
Reference
Kraut, M. A., Porter, J. C., & Gray, A. (2016). Tough choices: Ethical decisions in whistleblowing. Institute of Management Accountants.