Jenny is an accountant for an international energy corporation. She oversees the accounting for certain associated offshore entities. The amount of funds involved in the entities is substantial. At the end of the year, she notices that the accounting information from the offshore entities is not included in the consolidated financial statements of the corporation, but is reported on the consolidated tax return. She inquires about this and is told that the corporation does not report the financial information from the offshore entities since it would lower the earnings of the main corporation. Jenny is sure that this is not the proper accounting and tax treatment for the entities.

a. What would you recommend Jenny do at this point?

b. What potential ethics issues do you see in this situation?