ACCA Applied Knowledge · Business and Technology · Regulation and financial crime
An accounts assistant at Kestrel Ltd discovers that the finance director has been approving fictitious supplier invoices paid into a personal account. The assistant is worried about reporting this to the finance director's line manager, the chief executive. According to good governance practice, which is the most appropriate route for the concern to be raised initially?
The concern should go to the audit committee, chaired by an independent non-executive director. Because the finance director is implicated, reporting to that person would risk concealment, and public disclosure should be a last resort after internal and regulatory routes.
- ATo the audit committee, chaired by an independent non-executive directorCorrect
- BTo the finance director, to give an opportunity to explain
- CTo a national newspaper, to ensure rapid exposure
- DTo the supplier named on the invoices
Explanation
Where senior executives are implicated, concerns should go to an independent body such as the audit committee, which is independent of management. Telling the finance director would tip off the wrongdoer and risk evidence being destroyed. Going to the press first bypasses internal channels and the supplier has no role in oversight.
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