Dodgers Industries Inc., a publicly-traded company closed its fiscal year on December 31. Near the end of the year, the company's internal audit department determined that an important internal control procedure had not been functioning properly. The head of the internal audit department, Barney Rubble, reported the internal control failure to the company's chief financial officer, Fred Flintstone. After discussing the issue, Fred told Barney not to inform the external auditors of the internal control failure and to fix the problem quietly. Barney fixed the problem.

In March of the following year, the external auditors did not discover the internal control failure during their year-end audit.

After the audit, Dodgers issued their financial statements with the release of the Managements Report on Internal Controls (as required by The Sarbanes-Oxley Act of 2002 (SOX)), which stated that the management team (including Fred and Barney) believed that thecompany's internal controls were effective during the period covered by the annual report.

In examining Fred and Barney's behavior,did Fred behave ethically in this situation? Did Barney? Why or Why Not? Is there anyone who could be harmed by Fred & Barney not telling the auditors about their lapse in internal control?