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A Brief Overview of Federal and State Protections
Over the course of their careers, a sizable percentage of accountants and other finance professionals will experience one or more instances in which their employers ask them to do something that might raise ethical or legal concerns.
These situations, which often come up unexpectedly, are as varied as the businesses in which they arise. For example, the CFO of a finance company might instruct an employee to lower an estimate of loan losses because the current figure could scare off a prospective buyer. While interfacing with external auditors, the CEO might question whether it is necessary to disclose to the auditors what is known about the rapidly declining value of an investment. Or, a sales department head might insist on using some of next quarter's sales - backed up only by letters of intent - to boost this quarter's lagging sales figures. Employees who refuse to engage in such behavior may be told they are not team players and could face repercussions from management.
In such a situation, there are essentially three courses of action; employees can: 1) give in and do what their employer or their employer's client wants them to do; 2) resign from the company; or 3) insist on doing the right thing - comply with accounting rules, refuse to engage in fraud or inaccurate reporting of data, and report the problem up the chain of command until someone listens.
Each case is unique, with differing regulations that advise employees how to act The laws or regulations applicable to a company may require an employee to report such concerns or findings up the chain of command, or the employee may feel the need to speak up as a matter of professional responsibility. As lawyers who have represented finance professionals in the very situations described above (and many others like them), the authors can affirm that those choosing the third option of "blowing the whistle" on accounting fraud can launch employees on a rough but rapid road down the corporate ladder and out the door. This possibility is widely known and contributes to the reluctance among most employees to oppose accounting fraud or other such unlawful activity.
What is less commonly known is that...