You are a staff accountant in a large accounting department in a multinational public company. Your job requires you to review documents related to the companys equipment perchases. Upon verifying that purchases are properly approved, you prepare journal entries to record the equipment purchases in the accounting system. Typically, you handle equipment purchases costing $100,000 or less.

One day, the CFO unexpectedly calls you into an immediate meeting. You are anxious about the meeting and in your three years working for the company, you have never met the CFO. The CFO tells you that you have been doing a great job with the company and you have been selected to work on a top secret special project. The CFO states that he and the CEO have negotiated significant new arrangements with the companys equipment suppliers which require the company to make advance payments for equipment to be purchased in the future. Given that the payments will be made through the operating division, they will initially be classified as operating expenses, but the CFO will contact you at the end of every quarter to reclass these amounts as assets. The CFO asks you to create the new account Prepaid Equipment for this purpose.

A few weeks later, the CFO leaves you a voicemail with the adjustment for quarter one as $771,000,000. Your company generates over $8 billion in revenues and incurs $6 billion in operating expenses every quarter, but youve never made a journal entry for that much money. You confirm the amount with the CFO who abruptly tells you the amount is correct. The magic number for the other quarters are $560,000,000 for Q2, $742,745,000 for Q3, and $941,000,000 for Q4.

You are becoming increasingly uncomfortable with the journal entries youve been making. The Prepaid Equipment account now has $3.8 billion and there has been no discussion about when this balance will be reduced, and no depreciation has been recorded for it.

Just as you are reflecting on this, you get a call from the vice president for internal audit for an immediate meeting. The vice president indicated that she had discussed her findings with the CFO prior to meeting with you, and the CFO claimed that he too had noticed the peculiar trend in the fixed asset turnover ratio, but hadnt had the chance to investigate it further. The CFO urged internal audit to figure this out, as perhaps someone in accounting was making unapproved journal entries. The vice president identified you as the source of the journal entries and advised you to get a good lawyer.

Given your current circumstances, describe how you would have acted earlier had you been able to foresee where it might lead you. What should you do now?