This month's dilemma.

PositionHot potato - Disclosure of accounting fraud - Column

I am a member in business who works for a plc with market cap of [pounds sterling]8m. In going over some of the year's numbers from one of our divisions I have discovered a significant fraud. The auditors are due in this week and I am not sure if I should refer this up the line internally or discuss directly with our auditors? Is this likely to be compromising confidentiality at this stage?

Our response:

If there is a legal or professional duty to disclose (refer to Section 140.7 and 140.8), based on substantive facts, you would not be breaching confidentiality and would be upholding the code. It would be recommended to both raise and document the fraud to senior management, informing them of your obligation to discuss with, and not mislead, the auditors...

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