This is for my financial accounting class

please let me know if I answered these questions correctly and explain why Im correct. And if Im wrong please tell me how to improve my answers. Thank you

The July 1998 issue of Inc. magazine includes an article by Jeffrey L. Seglin entitled Would You Lie to Save Your Company? It recounts the following true situation: A Chief Executive Officer (CEO) of a $20-million company that repairs aircraft engines received notice from a number of its customers that engines that it had recently repaired had failed, and that the companys parts were to blame. The CEO had not yet determined whether his companys parts were, in fact, the cause of the problem. The Federal Aviation Administration (FAA) had been notified and was investigating the matter. What complicated the situation was that the company was in the midst of its year-end audit. As part of the audit, the CEO was required to sign a letter saying that he was not aware of any significant outstanding circumstances that could negatively impact the companyin accounting terms, of any contingent liabilities. The auditor was not aware of the customer complaints or the FAA investigation. The company relied heavily on short-term loans from eight banks. The CEO feared that if these lenders learned of the situation, they would pull their loans. The loss of these loans would force the company into bankruptcy, leaving hundreds of people without jobs. Prior to this problem, the company had a stellar performance record. Answer the following questions.

(a) What are the CEOs possible courses of action? What are the potential results of each course of action? (Take into account the two alternative outcomes: the FAA determines the company (1) was not at fault, and (2) was at fault.)

The options are that the CEO could sign and hope that the news doesn't come out about the potential faulty parts or he could refuse to sign and make an announcement about the investigation and the events that lead to it. If he signs and the FAA finds the parts to be the problem the company will likely lose its backing and go under. If he signs and the FAA finds that the company was not at fault everything will likely blow over. If he refuses to sign and makes the investigation public the company will likely lose its backing before the investigation is complete due to the gamble involved. The likelihood of the company going under is much greater in these circumstances.

(b) What would you do, and why?

I would not sign the letter. Signing would be higher risk making the situation completely out of your hands with potential to snow ball into loss of creditability, poor media reviews, loss of customer loyalty etc.

(c) Suppose the CEO decides to conceal the situation, and that during the next year the company is found to be at fault and is forced into bankruptcy. What losses are incurred by the stakeholders in this situation? Do you think the CEO should suffer legal consequences if he decides to conceal the situation?

The loss would be the same for the stakeholders as it would if the CEO revealed the investigation and the company was at fault. The company would fail and they would be out their investment. The investigation would come up with the same result no matter what the CEO does. I don't think that the CEO should have legal consequences if he conceals the situation. Technically, he would have lied on the form that he signed. That might bring some legal consequences. As far as legal consequences otherwise, I don't see how there could be any further. He would have lost his job when the company failed anyway. That is a punishment for him in itself.