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ACCA Strategic Professional · Advanced Financial Management · The role and responsibility of senior financial executive/advisor

A company's CFO discovers that a proposed acquisition's board paper omits a known pending regulatory investigation into the target, which could materially reduce its value. The CFO is a professional accountant. What should the CFO do first?

The CFO should raise the omission with the board and ensure the paper is corrected so decisions are not based on misleading information. Staying silent breaches integrity, leaking to the press breaches confidentiality, and trading on the knowledge would be unlawful insider dealing.

  1. ASay nothing, since the paper was prepared by the corporate development team
  2. BLeak the information to the press to protect shareholders
  3. CRaise the omission with the board and ensure the paper is corrected so decision-makers are not misledCorrect
  4. DTrade shares in the target before the matter becomes public

Explanation

Professional ethics require the CFO not to be associated with misleading information and to resolve concerns through internal channels, starting with correcting the paper for the board. Leaking information breaches confidentiality, and trading on it would be insider dealing.

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