Acct 465 case 6 8 presentation

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Acct 465 case 6 8 presentation

  1. 1. ACC 465 Case 6-8Welch v. Cardinal Bankshares Corp. Josh Smith
  2. 2. Template1. Determine Facts2. Identify Stakeholders3. Identify Ethical Issues4. Specify Alternatives5. Make Decision6. Double Check
  3. 3. 1. Determine FactsDavid Welch, a part time CPA, obtains theposition of CFO at a small Virginia bank calledCardinal Bankshares Corp. David Welch begins to notice discrepancies inaccounting practices and procedures. Welchbelieves he is protected under the SOX Act andbegins to collects evidence for a whistleblowercase.
  4. 4. 2. Identify StakeholdersDavid Welch (former CFO of Cardinal)Ronald Leon Moore (CEO of Cardinal)Cardinal Bankshares Corp.
  5. 5. 3. Identify Ethical IssuesDuty of Loyalty– David Welch has a personal duty and responsibility to the company to perform his accounting to the best of his ability for the company. The discrepancies of the accounting principals in which he found should have been handled by him and re-checked with the external auditors in order to solidify his loyalty to the company.Liabilities of Directors and Officers– As directors of the company David Welch and Ronald Leon Moore would be held accountable for their actions as well as employees under their direction. With that weight on their shoulders it would be in their best interest to perform ethical and legal business practices.
  6. 6. 3. Identify Ethical IssuesBusiness Judgement Rule As CFO Welch should have implemented the Business Judgement Rule. Welch could have directed employees under his department to perform at his standards. Welch as a CFO is a leader in the company. He should have taken control of the reigns and fixed the issues at hand. Sarbanes-Oxley Act The Sarbanes-Oxley Act was an ethical act created to protect individuals such as David Welch in case there was a legitimate corporate fraud scandal. However, since there were no specific and definitive violations related to the federal and security laws Welch should not have acted in the manner he chose. 6 6
  7. 7. 4. Specify AlternativesWelch could remain loyal to his company and fix theaccounting errors.Restrict financial records, direct lower levelemployees to perform accounting according to GAAP.Then check their work himself or use an external auditfirm.Accept the fact the company was violating GAAPprincipals and do nothing.Have the external auditors review the financialstatements.
  8. 8. 5. Make DecisionAccept the fact the company was violatingGAAP principals and do nothing.– OrFix the accounting errors, direct the lower levelemployees to follow GAAP, restrict thefinancial records access, and check theemployee work as well as an external firmaudit the statements.
  9. 9. 6. Double CheckDavid Welch should (1) fix the accountingerrors, (2) direct lower level employees tofollow GAAP, (3) restrict financial recordsaccess, and (4) check the employee work, (5)have an external audit firm confirm thestatements.– These actions would ensure the most correct financial practices following the SEC and federal guidelines. David would be seen as a company leader and keep his job.
  10. 10. Making It PersonalDid David Welch ruin his carreer as anaccountant?How will his future employers view the way hehandled the situation?David’s loyalty will always be in question.

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