02 May QuestionDISCUSSION QUESTIONS FOR WK. 2
Question
DISCUSSION QUESTIONS FOR WK. 2
1. Case 3-4 Franklin Industries’ Whistleblowing (a GVV Case)
Natalie got the call she had been waiting for over six long months. Her complaint to the human resources department of Franklin Industries had been dismissed. It was HR’s conclusion that she was not retaliated against for reporting an alleged embezzlement by the Accounting Department manager. In fact, HR ruled there was no embezzlement at all. Natalie had been demoted from assistant manager of the department to staff supervisor seven months ago after informing Stuart Masters, the controller, earlier in 2015, about the embezzlement. Her blood started to boil as she thought about all the pain and agony she’d experienced these past six months without any level of satisfaction for her troubles.
Natalie Garson is a CPA who works for Franklin Industries, a publicly owned company and manufacturer of trusses and other structural components for home builders throughout the United States. Six months ago she filed a complaint with HR after discussing a sensitive matter with her best friend and coworker, Roger Harris. Natalie trusted Harris, who had six years of experience at Franklin. The essence of the discussion was that Natalie was informed by the accounting staff of what appeared to be unusual transactions between Denny King, the department manager, and an outside company no one had never heard of before. The staff had uncovered over $5 million in payments, authorized by King, to Vic Construction. No one could find any documentation about Vic, so the staff dug deeper and discovered that the owner of Vic Construction was Victoria King. Further examination determined that Victoria King and Denny King were siblings.
Once Natalie was convinced there was more to the situation than meets the eye, she informed the internal auditors, who investigated and found that Vic Construction made a $5 million electronic transfer to a separate business owned by Denny King. One thing lead to another, and it was determined by the internal auditors that King had funneled $5 million to Vic Construction, which, at a later date, transferred the money back to King. It was a $5 million embezzlement from Franklin Industries.
Natalie met with Roger Harris that night and told him about the HR decision that went against her. She was concerned whether the internal auditors would act now in light of that decision She knew the culture at Franklin was “don’t rock the boat.” That didn’t matter to her. She was always true to her values and not afraid to act when a wrongdoing had occurred. She felt particularly motivated in this case—it was personal. She felt the need to be vindicated. She hoped Roger would be supportive.
As it turned out, Roger cautioned Natalie about taking the matter any further. He had worked for Franklin a lot longer than Natalie and knew the board of directors consisted mostly of insider directors. The CEO of Franklin was also the chair of Page 181the board. It was well known in the company that whatever the CEO wanted to do, the board rubber-stamped it.
Natalie left the meeting with Roger realizing she was on her own. She knew she had to act but didn’t know the best way to go about it. Even though Roger cautioned against going to the CEO or board, Natalie didn’t dismiss that option.
Questions
Assume you are in Natalie’s position. Answer the following questions.
1.What is your most powerful and persuasive response to the reasons and rationalizations you need to address? To whom should the argument be made? When and in what context?
2.What is confidential information?
3.Why is this information protected from disclosure and when should an accountant disclose confidential information to a third party?
ANSWER EACH QUESTION IN 200 OR MORE WORDS
USE CITATIONS AND REFERENCES
USE APA GUIDELINES
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