Case Situation:
During the audit of a closely held corporation the junior member of the audit team discovers an anomaly in the books which suggests that certain corporate officials may be laundering overseas money in the company's international sales operation. The junior auditor suspects that the senior member of the team is aware of the issue which apparently has been going on for some time. The company is a major client of the auditors.
Question 1. What action do you believe the junior auditor should take? Justify your answer.
Question 2. What "stakeholder" interests need to be considered if the revelation of the facts let to the failure of the company?
Question 3. In what court would shareholders bring a derivative action against the personnel and companies involved in the money laundering?