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ACCA Applied Knowledge · Business and Technology · Ethical conflicts and dilemmas

Priya, an accountant employed by a manufacturer, discovers that her finance director has been deliberately overstating inventory to meet loan covenants. She has raised it with him and he has refused to act. Which action is the most appropriate NEXT step?

Priya should follow the entity's internal whistleblowing or escalation procedure, such as reporting to the audit committee or non-executive directors. Internal escalation comes before external disclosure, and confidentiality does not require her to stay silent about deliberate misstatement of financial information.

  1. AFollow the entity's internal whistleblowing or escalation procedure, for example by reporting to the audit committee or non-executive directorsCorrect
  2. BImmediately send the evidence to the press to put pressure on the board
  3. CSay nothing and keep a private record, since confidentiality prevents any reporting

Explanation

Having failed to resolve the matter with the finance director, Priya should use internal channels such as the audit committee or an internal whistleblowing procedure. Going to the press at once bypasses these routes and may breach confidentiality. Silence is wrong because confidentiality does not protect fraud or misstatement.

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