A recently retired political figure has decided to start a charity for a popular
ID: 2361579 • Letter: A
Question
A recently retired political figure has decided to start a charity for a popular cause. Appropriate clearances were obtained and a board created of friends and supporters. The board then hired a CPA to do the audit, as required by law. The CPA was surprised to see how much of the money raised was being absorbed by expenses and how little was going for the announced purpose of the charity. Large salaries were being paid to the officers who also received generous expense allowances. There was a rather large office staff and the costs of publicity seemed more than ordinarily would be expected. All expenses were appropriately approved, supported, and documented. By artful allocation of costs, and the use of broad, general classifications for expenses, the circumstances were not obvious to an uninformed reading of the financial statements. The CPA told management that he felt that more detailed explanations and informative classifications would be needed for adequate disclosure. Management refused and correctly stated that they were not breaking any law by the proposed presentation. When the CPA insisted, he was fired. His report to the board, carefully explaining the reasons for his departure, was accepted without comment. Another CPA who felt less strongly about the representation was hired to do the audit and issued an unqualified opinion. The first CPA remained troubled, however, that this charity was free to continue to raise money from unsuspecting donors. The rule of confidentiality left him no alternative, he believed, but to remain silent about what he knew.Explanation / Answer
Steps the CPA may ethically take in the situation listed: 1. Consult an expert – his union rep, ACAS or an employment lawyer. Tell them what is happening and take advice on what he should do 2. Start to create an audit trail of evidence for a possible tribunal. Gather every piece of paper he has been given so far, and keep everything he is given from now on. Make his own (detailed) notes about every meeting, whether it’s formal or informal, including the date, who was there and what was said. Go back and make notes about any meeting that has previously happened, even if he can’t remember the exact date. Ask for everything to be put in writing, and make a note of who has taken the action to do this. Sometimes, even becoming aware that he is taking notes is enough for an employer to back off 3. Do not agree to anything, or sign any document, without having it checked and taking advice first Remember that he only has three months from the effective date of his redundancy to launch his tribunal application. Even though his representative may be doing this for him, they may be dealing with many cases at once, so he should always keep an eye on the clock.