ACCA Applied Knowledge · Business and Technology · Ethical conflicts and dilemmas
Tomas, a management accountant, discovers that his finance director has been deliberately overstating inventory to meet bank covenant targets. Tomas raised it with the finance director, who told him to ignore it. According to ethical guidance, what is Tomas's most appropriate next step?
Tomas should escalate through the organisation's formal internal whistleblowing or reporting procedures, for example to the audit committee or higher management. Going public immediately, resigning silently or ignoring the matter does not properly address the deliberate misstatement.
- AImmediately send the evidence to the press to protect the public
- BFollow the employer's internal whistleblowing or escalation procedures, such as raising it with the audit committee or higher managementCorrect
- CResign quietly and say nothing further to anyone
- DDo nothing, as the finance director is his superior
Explanation
Where internal discussion with the person involved fails, the accountant should use the organisation's formal escalation or whistleblowing procedures, such as the audit committee or board. Going straight to the press skips internal channels, while silence or resignation alone leaves the misstatement unaddressed.
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