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THIS CASE STUDY IS ADAPTED FROM A REAL-WORLD incident reported to the INLA, Ethics Hotline. Of course, the names and selected facts have been changed to maintain confidentiality.
Jeff A. is a long-time member of IMA. In fact, he has been a member for more than 20 years, almost as long as he has been employed at the B-T Company, where he is the chief accounting officer, reporting to the V.R of Finance and CFO. B-T is a publicly held manufacturer traded on NASDAQ with a February 28 fiscal year.
Jeff 's disagreements with management about proper accounting and reporting began in 1995, when company funds were used to pay the costs of a lawsuit settlement against a separate Company X. But Company X is totally owned by various senior officers of B-T. There are no significant business dealings between B-T and X. The settlement amount paid represented about 4% of B-T's operating income, and Jeff thought it should have been capitalized and recovered from Company X. Instead, it was expensed with...