Holding Accountants Accountable

CHAPTER 6Overcoming Barriers to Reporting Fraud and Misconduct

Accounting Humor

Q – Where do homeless accountants live?

A – Tax shelters.

IN THIS CHAPTER, WE discuss obstacles that may cause hesitation in accountants and their organizations in disclosing frauds they find. We also discuss the rules and regulations that require, or incentivize the disclosures, along with protections afforded to those who choose to.

INTRODUCTION

We have discussed at length the accountant's liability for not finding fraud. However, what happens when the accountant actually finds it? And discloses it? Would it surprise you to learn that there could be career-limiting consequences to disclosing fraud? And sometimes, to some, it may outweigh the incentives and exhaust their moral compass. In this chapter, and consistent with what we’ve discussed previously, we discuss the risks and rewards of disclosing fraud, and other barriers (pressure) that may limit professionals from doing the right thing.

If accountants have done their job and face a decision of whether or not to disclose fraud and misconduct, they must address the risk of adhering to professional standards and disclosing it, or stare down the frightening reality of the consequences they may face in disclosing their findings.

BARRIERS

There could be a number of impediments standing in the accountant's way. One barrier could be an emotional ...