Answer questions 1-3 located at the bottom of the case. 13 CASE Blowing the Whis
ID: 2819641 • Letter: A
Question
Answer questions 1-3 located at the bottom of the case. 13 CASE Blowing the Whistle: Accounting Practices at Glenfair Electronics vice president of human resources at Glenfair Electronics, sat at his desk thinking listened intently to Patel describe what had transpired in the finance department during the last few weeks. Patel joined Glenfair after completing his degree in accounting five years ago. For the past three years, he had been preparing Glenfair's sales revenue reports. As a listed company, Glenfair was required by the Securities and Exchange Commission to issue public sales and profit forecasts. Glenfair Electronics had over 10,000 employees and a reputation for produc- ing high-quality electronic components used in a number of manufacturing applications. The n to experience a slowdown in product demand, and their share price had about declined as well in the last year and a half Patel had told Schein that he had been instructed to use a different and more aggressive accounting method for forecasting and calculating projected sales revenue for the coming year. He believed that such an approach could mislead shareholders about Glenfair's likely future sales performance. The previous chief financial officer (CFO) had taken a rather conservative approach and did not stretch the boundaries of acceptable practices. Since the beginning of the year, however, Patel was working under a new CFO, John Beatty. Beatty had joined Glenfair earlier in the year after not obtaining a promotion to CFO at his previous company. Everyone perceived him to be smart and ambitious and it was clear that he was determined to make his mark at Glenfair. When Patel pointed out that the p accounting methods were very different from Glenfair's traditional practices for reporting sales revenue, he told Schein that Beatty had said, "Well, I am the new CFO, and I have a ch." However, it was his next remark that disturbed Patel the most. According to Patel, Beatty went on to say, "Sales should turn around next quarter, and we are justified in reporting higher expected sales revenue in the coming months. Besides, Anwar don't you want your Glenfair stock to do well?" Projected higher sales revenue could indeed burnish Glenfair's earnings outlook and probably help its stock price. When Patel persisted in questioning the accounting methods, Beatty allegedly told him to do his job as instructed. Since that conversation, Patel felt that Beatty had become hostile toward him, and they no longer had a friendly relationship. Despite his fears, Patel felt he had to come to Schein for advice. Schein could see that Patel was worried about Beatty finding out about their Schein was disturbed by what he had heard from Patel and sat at his desk thinking about what he should do as vice president of human resources ESTIONS 1. If you were Schein, what would you do, if anything? Explain. 2. What should Schein do about Patel's claim that Beatty has become hostile toward him? 3. What rights and protections do whistle-blowers have in the workplace today?Explanation / Answer
1) In the given case Schein needs to think through and understand the situation in a more detailed manner through Patel.He should should analyse the underlying facts of the situation.Next thing for him to do is to to plan an internal investigation by deciding the scope and choosing the appropriate team for such investigation.It is of utmost importance to select the investigation personnel properly since it is a complaint against CFO which is a top position and people may be biased or loyal to him and manipulate the investigation.If need be an outside counsel should be appointed who has had no ties with the company before so that more unbiased and proper investigation is carried out.
After the investigation if the allegations made by whistle blower are proved right then the next big step is for Schein to decide along with other members of the company in what action to be taken.They can choose to internally take action against the CFO or choose to inform the government by making the public disclosure. Schein needs to consult the proper person about the possible advantage and disadvantage of making the information public and choose what suits the company in this particular case
2) For Patel's claim that Beatty is hostile towards him , Schein needs to assure him that he need not worry about it and that there will be proper protection of his confidentiality as a whistle blower.He should also as the vice president of human resource department talk to Beatty about the same and should warn against any harassment or ill treatment towards Patel.
3) The Sarbanes Oxley Act states various rights and protection available to whistle blowers at work place who came forward in a genuine attempt to provide information regarding crimes or other dishonest acts.
Accordingly, if an employee complains about illegal acts by an another such as fraud or other wrongdoing, that employee is protected against retaliation. There is no penalty for the allegations being wrong, as long as it was made with good intent.Retaliatory measures of any kind, such as being fired or even harassed, are prohibited by these laws.