You are in your third year as internal auditor with VXI International, manufacturer of parts and supplies for jet aircraft. VXI began a defined contribution pension plan three years ago. the plan is a so-called 401(k) plan (named after the tax code section specifies the conditions for the favorable tax treatment of these plan) that permits voluntary contributions by employees. Employees' contributions are matched with on dollar of employer contribution for every two dollars of each employee contribution. Approximately $500,000 of contribution is deducted from employee paychedk each month for investment in one of three employer-sponsored mutual funds.

While performing some preliminary audit test, you happen to notice that employee contribution to these plan usually do not show up on mutual fund statements for up to two months following the end of pay periods from which the deductions are drawn. On further investigation, you discover that when when the plan was first begun,contributions were invested within one week of receipt of the funds. when you question the firm's investment manager about the apparent change in the timing of investments, you are told, Las year Mr. maxwell ( the CFO) directed me to initially deposit the contribution in the corporate investment account. At the close of each quater, we add the employer matching contribution and deposit the combined amount in specific employee mutual funds."

Required:

1) What is Mr. Maxwell's apparent motivation fo the change in the way contribution are handled?

2) Do you percieve an ethical dilemma?