The Facts
The Public Company Accounting Oversight Board (PCAOB) is established under the Sarbanes–Oxley Act of 2002. Defiance against and/or obstructing the mandate of the PCAOB is a federal offense. Secondly, for PCAOB to consider further investigations, the likelihood that an irregularity has been undertaken is quite high. The request being made by the partner is most definitely a cover-up .
Ethical Issues
Any auditor, more so a senior auditor like Ann has an obligation to all stakeholders, including the general public to ensure that public company accounts are absolutely above board. This ethical obligation is absolute. Secondly, as a corporate citizen, Ann’s office have an ethical obligation to be honest with authorities including the PCAOB. Falsifying a document is both ethically wrong and a crime.
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Who is Affected By the Outcome
Ann stands to be most affected by the outcome. If she is not caught, she has crossed an ethical line that will affect her career after that. If she is caught, she will face adverse profession and legal ramifications. The audit firm also stands to suffer adverse consequences if the treachery is discovered. Finally, the general public relies on audit reports to make investment decisions and such a breach of trust can adversely affect investor confidence.
Available Alternatives
Three plausible alternatives exist for Ann. She can accept the request of the Partner and falsify the document. Ann can also decline the request. Finally, Ann can adhere to the wishes of the partner then act as a whistleblower by informing on the company to the PCAOB.
Consequences
Option A will make Ann complacent and a participant in a criminal act, which might have adverse professional and legal implications. Option two will get Ann a reprimand from her bosses and perhaps cost her a promotion. Option three will ensure that the intended mischief by her firm will be avoided and punished.
Appropriate Action
Ann’s obligation not only goes beyond just declining the illegal act requested by her boss but also ensuring that the act does not happen at all. The third option is the only one that can achieve this. Ann should go along with the partner then ensure that the PCAOB gets to know about it.
