Freya is an accountant working on the tax return of a high -tech client. After reviewing the work papers, she discovers that there is a pattern of double billing the U.S. Navy for various projects done by the tax client. She brings this to the attention of her manager on the job, and he tells her that it is not the CPA firm's business what the client does since this is not an audit engagement.

1. What would you recommend Freya do at this point, based on what you have studied?

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