Unethical Accounting Situation

Never compromise your values. There is always a line in the sand and you have to be strong enough not to cross over it when it goes against everything you believe in.

Anon,

As you indicate, this is your first job. I applaud your sense of right v wrong, and would suggest you ask a trusted mentor to help you interpret your situation for you and help you decide. Christie is 100% right on "no compromise over values."

Talking to a mentor would help you determine the true factors that you base your decision on.

Best wishes!

"corrupt acts against the interest of the company"

I'd like to know examples of this. Sometimes theory (what we were taught in school) and the real world practice is so different that we interpret it as "crossing the line". Risks are also taken by upper management knowing full well about the consequences of their actions.

I am NOT saying that you are being naive. But some context and examples will greatly benefit others in answering your post.

If you are routinely being asked to do something unethical and your superiors consider it normal business practice it's time to move on. I have found that once you establish yourself as a person who has high standards both ethically and in your work product it will be rewarded over time. The folks at Enron compromised.

I am in agreement with others, that you should never compromise on ethics. If you don't think it's right, then don't do it, but be sure to express to your leader(s) why you object. Personally, I have the utmost respect for the people engaged enough to disagree with me. It shows passion, integrity, and that they are thinking about what they are doing rather than just executing a pattern of activities. I am not perfect, and knowing they are keeping me in check is some how comforting. The worst outcome would be a team of blind followers. Perhaps your leader hasn't viewed the issue from your perspective. Or, perhaps you haven't viewed it from his/hers. There is no reason you can't have a healthy debate with your leadership, especially about this subject. In most cases, unless laws or GAAP are violated, it is gray, so make sure you have a well rounded perspective before jumping to any conclusion.

If that doesn't' work, next, I would recommend evaluating who is asking you to do things you aren't comfortable with. Even if you are told it is coming from the top,verify that personally, as high up as you need to go. While it should be a last result, you do have the option to go around your immediate leader, up the ladder. Everyone in the organization has a fiduciary responsibility to the company. Not stopping unethical behavior, is in itself, unethical. It's not impossible, but I'd find it highly unlikely that multiple leaders within the organization would cohort on a truly unethical action. In my experience, the unethical stuff is normally someone trying to CYA, instead of taking their lumps and moving on. In today's world, leaders are more than aware of the substantial consequence, personally and professionally in this area. If the leaders are conspiring, severance is probably the best outcome you can hope for.

The market is pretty good for finance and accounting professionals right now. Don't be afraid to do what is right. I know first hand unemployment is scary as heck, but an ethics ding on your record will render your degree and work up to this point null and void (at best). It's not worth the risk.

There is a lot of grey in the accounting world so first be sure that you are solid in your position that something crosses the line into black. Research the accounting rule and be prepared to support where you are being asked to violate ethics. Have that discussion with your supervisor and allow them to address and counter your assertions. Frame it as a learning opportunity for you ("It seems ..., what am I missing?"). You may learn that there are other interpretations to the rules that are equally acceptable. On the other hand, if your research is dismissed without rebuttal and are simply told to follow orders, you're probably working for the wrong people because either:
- they are aware that they are approaching/crossing ethical lines or
- they believe their actions justified but don't think enough of you to invest the time to teach you the difference.

I can appreciate the dilemma that you find yourself in. And, I agree with what all others have posted here regarding compromising your ethics.

An example may help. I had a situation many years ago in my career where one of our SVP's was filling in for our President while he was on an extended vacation. It was quarter end, and we were preparing variance reports for our parent company. The SVP came to me and asked that I modify the method we were using to estimate returns to show a more favorable number. His perspective was the they are only 'estimates' anyway.

After explaining to him how our methodology had evolved over the years; he remained insistent.

So, I suggested that in our variance report, we would highlight the fact that the method of calculation was inconsistent with prior reports and with the way that our budgets had been prepared based on the judgement of this particular executive. Only under those conditions would I consider modifying the basis of the calculation.

Needless to say, the executive rescinded his request.

There are other jobs.

It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.Warren Buffett

While I am sure that happens sometimes, would you say if you were terminated for doing the right thing that would be held against you when seeking employment?

I agree with Christie, Wayne, Chris and Emerson. Although companies and people change over time, and circumstances can place unforeseen pressure, such situations will be far less likely in organizations that have a culture of integrity and less illogical external pressures. One takeaway is to ensure your own values and ethics line up with that of your organization before taking a role and also being aware of open door and whistleblower policies in case such situations arise.

One could naively hope that events over the past decade involving such people and organizations as Tyco, Worldcom, Enron, Conrad Black, Bernie Madoff and many more would be sufficient to eliminate such situations. Apparently this is not the case, which likely doesn't surprise any of us.

It looks like everybody agrees that you should not compromise your ethical standards.
The suggestion above that you discuss the situation with an impartial trusted and experienced third party is a good one. You need a different perspective before you make a major career decision. If after third party review you still feel that your ethical standards are at risk, you need to begin looking for another job.

I would never put myself in a situation of doing something illegal, immoral, or fraudulent. That doesn't mean there are not gray areas where I have had to move off my position on issues even when it comes to the presentation of data that at first would seem black and white. If you are going to survive in a financial career, you need to learn to make those distinctions. Again, I would never do something I thought would damage my integrity.

Stay or go? If you stay, you will most likely be faced with similar pressures. I think you should start aggressively looking for another position. Keep your current job until you find another. One positive is that you are in accounting and there are thousands of accounting jobs out there. Every company needs an accountant. Don't be afraid to go. You will be blessed for being an honest and forthright person.

It sounds like you are young in your career. Do not compromise your ethics. Move on to another company. You have plenty of options to find a more ethical company given your experience level.

Watch "American Greed." Google Healthsouth CFO's. Remember the CEO expression: "Somewhere in this company is a CFO who can make the numbers I promised the street, and I certainly hope you're that CFO." It's a slippery slope, one indiscretion will lead to another. QUIT! But make sure the CEO knows why. Sometimes these things actually work out for you and if you're good, you can always find another job.

You mentioned this is your first job.. Don't allow it to become your last job.

Not sure if anyone else has commented with this, but you can consult your auditors, either or both internal if applicable, or external, or consult with in-house counsel if applicable.

You would be surprised how quickly the person putting the pressure on you will change their position if the risk of the issue surfacing up to these levels is possible.

Yup, don't compromise integrity as that is all you have in the end. In practice, there are (or should be) a variety of avenues available to communicate and escalate one's concerns: one's own management team (boss or boss's boss), general counsel, HR leader, audit committee, disclosure/control committee, and whistle-blower line. If either the nature of the relationships or company structure is such that these things don't exist or are not effective, then it is probably not a good place to be anyway. Plus (I'm not a lawyer and I think it depends on the state), I believe firing someone because they disagreed with or escalated such issues is illegal as it is a form of retaliation.

Time to brush up your CV and move on. That assumes you are an accounting and business expert.
You did say this is your first job and I did not see any reference to you being a CPA. Therefore, consult with the CFO and do so in a non threatening manner. Sounds like this is just part of your seasoning and development process as a person.

This type of situation is always. Typically, an accountant may be told to book an
entry (such as debit Restructuring Expense and credit Accrued Liabilities for $1Million) originating with a senior executive who ordered your manager. Ultimately, .the practical non-ethical rationalization is "I have my orders in writing, and that's good enough for me." Of course, disclosure of the economic basis for the entry is strategically secret.
You wouldn't be fired for rattling your manager's composure over this issue every month
end. Here's the downside if your response style is abrasive or counter to the corporate culture, you may have a difficult time in your next performance review. Advice: Do not make any personal phone calls and do not use the corporate email or internet for any personal purpose. If the ethics of the corporate culture is not appropriate and you
cannot find an effective senior official, you might as well look for another job right away. In many companies, you can be turfed during your initial probation period without
any justification.

I agree- your integrity is all you have.
Be sure of your facts and then get going.
A long time ago I was asked to make the inventory look better with a journal entry. I asked my boss to give me one good accounting reason why. He had no response and dropped his request.
In college they recommended that we find another job and when we resigned to give them a letter listing the unethical requests/activities and to send the same letter to ourselves, certified and keep it unopened for your protection.