Scenario- You have been invited to attend a meeting where your immediate supervisor will be presenting a draft of detailed financial projections to the chief financial officer and a subsequent meeting with the company president. You've not been involved in the preparation of the analysis thus far but understand that you might have some tasks delegated to you after the meeting. In addition, you realize that the company is at a critical juncture from issues such as high attrition of the accounting staff, current economic conditions, and increased competition.

Your Role- You have recently been hired in the fairly small accounting department of corporate business. The department is so small, in fact, that you may be called on at times for tasks ranging from simple bookkeeping, to the preparation of financial statements and projections, and to perhaps even filling-in on the internal audit staff. One of your first responsibilities is to assist a senior level accountant with a detailed financial projection after input from the chief financial officer and the president of the company.

Key players-

Senior accountant -We were up most of the night working on these projections. It was sure nice to have some help with Excel. As you can see, we're projecting a return to positive cash flow by early next year. We need to refine some of the assumptions but hopefully, we have explained the key factors adequately.

CFO-It looks like the two of you have done a great job in preparing the projections. We can go ahead and discuss them with the company's president. Just remember to not mention any issues about our accounts receivable and our allowance accounts. We need new bank financing and the less said about past issues the better!

Company president- I'm glad the three of you are coordinating this exercise. That's one less item on my "to do" list. I've promised the loan officer at the bank that I'll have a package to them by early next week. I'm relying on you as a team to meet that deadline with a set of projections that is realistic and achievable.

You need to draft a summary of how you will handle the situation. Specific questions that should be addressed are as follows.

• Do you feel there might be an ethical issue present? For the moment, assume that no laws have been broken and only focus on any possible ethical issues.
• If you were going to report a suspected ethical issue, how would you do so? For instance, to whom would you report? Would you first discuss the matter with anyone in particular?
• Would the manner in which you respond vary depending on whether this corporation was privately held or publicly traded?
• Does the fact that you have only been recently hired play into your decisions?
• What possible sources of guidance might be available from a professional organization or your state’s regulatory body overseeing the accounting profession?
• Lastly, assume that you suspect that some state or federal laws may have been broken. In other words, the problems might be beyond just a possible ethical issue. Would this change your handling of the situation?