Case 4 DD 2.6.2021.docx - QUESTIONS 1 Professor Thila was...

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QUESTIONS 1Professor Thila was about to finish marking her students’ examination papers whenshe received an unidentified call. She decided to pick it up anyway.“Hi Professor, I am one of your former students but I would rather not to tell you myname because I need an advice from you”, said the voice on the other side of phone.“What can I do for you?” she replied.“I am concerned that the CFO of the company where I serve as finance controllerjust provided our local bank fraudulently misstated financial statements. Can I explainthe whole story” the voice asked.“Sure, I will see if there is some way I can help,” responded Professor Thila.“I joined a privately-held, small, start-up company about four months ago. OnFriday last week, the company’s chief executive officer (CEO), and the chief financialofficer (CFO) met with representatives of the bank that funds the company’s line ofcredit. One of the purposes of the meeting was to provide our most recent quarterlyfinancial statements. The company is experiencing a severe cash shortage, and thebank recently halted funding the line of credit until we could present our most recentoperating results. It was at that meeting, just three days ago, that our CEO and CFOknowingly submitted financial statements to the bank that overstated sales andreceivables accounts,” the voice explained.“I got to know about this when the accounts payable clerk related to me theincident that happened to him. Last week, the CEO instructed him to record entries theCEO had handwritten on a piece of paper. The clerk has never worked with sales andreceivables.The CEO told him not to mention the entries to me.In the event that I

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Term
Winter
Professor
Hashem A. Hashem
Tags
Management occupations, Chief Executive Officer, Executive officer, Chief financial officer

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