Question: Advanced Auditeing Scenerio:
You are Nathan Johnson, a CPA employed as Controller for Achieving a Better Life Experience (ABLE), a charitable organization that offers support programs and services designed to meet the unique needs of adults with developmental disabilities and include daily life skills training, development of vocational skills, or assistance with in-home activities. ABLE is having severe financial difficulties due to the prolonged recession which has taken a toll on fundraising, its' major source of operating revenue. Cash reserves are nearly gone and vendor payments stretched to their limit. ABLE's largest donor, Warren Buffet requires that ABLE provide him quarterly financial statements to assess the charity's good stewardship of resources and as a condition to him funding future quarterly donations. The current quarterly financials are due and the initial results are not good. Warren Buffet has called seeking the statements which you promise to have completed and available next week. The CEO/President of ABLE, Leigh Ann Walker comes to your office and you update her as to ABLE's financial status and the recent inquiries of Warren Buffet.
Walker agrees the financials don't look so great and laments ABLE's predicament - the need for Buffet's contribution to stay in operation, but ABLE's need for solid financials to get his contribution. Walker states what we have to do is make the financial statements look good for the short term. Things will get better soon as the economy picks up with the new POTUS.†Pausing, Walker adds, “Listen. I've thought about and I think I have a quick fix to our problem. One of our biggest payables is to Hollinger International, and their president is Conrad Black, a golfing buddy of mine. Even though we haven't paid him in months, he told me that he would be willing to give us an official letter immediately waiving our current payable balance - not permanently, but just until we get through this cash crunch.†Seeing Nathan's frown, Walker adds, “Listen. It'll keep us afloat. And we're not doing anything illegal. Conrad is fully authorized to do this, you know, as a goodwill gesture to a worthy cause. Who knows? Maybe in the end, he will cancel our debt. You never know! So, what do you think?†Awkward silence fills the room for a moment, Walker stands and states “I have to return a quick telephone call to return, let's talk more in 15 minutes.†Johnson swivels his chair to look out the window. He is well aware that if Buffet stopped donating to ABLE, the charity might go under. Considering all the handicapped people who depended on ABLE, he felt a sense of guilt and helplessness in risking the loss of those donations
Answer the following questions using the scenario above:
a. Identify the ethical dilemma facing Nathan Johnson.
b. What alternatives are available to Nathan?
c. What are the consequences of each alternative?
d. If you were Nathan which alternative would you choose?
(answer in essay form, min. of 500 words, be detail and specific)