Professional Ethics Shared Interest Group

Does the potential harm caused by telling the truth ever justify remaining silent? And when does loyalty to your organization become a conflict with your professional responsibility?

A CFO discovers that a long-standing client has been intentionally delaying the recognition of certain expenses to meet its financial targets. The CFO raises the issue with the CEO, who responds: "If we recognize everything now, we'll miss our targets, employees could lose their bonuses, and we may have to lay people off. We're only delaying the expense-it isn't fraud."

The CFO now faces a difficult choice: protect the company and its employees, or insist on financial reporting that accurately reflects the company's position-even if doing so causes significant consequences.