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client questions

Was just doing my taxes and came across a line other Other Income asking the following...to paraphrase...this is where you declare "Embezzled or other income from illegal activities"

Right, because if I did embezzle or get income from other illegal activities, I'd want to tell the government so, and not just that, I'd pay taxes on it.

Although we do have such questions on our checklists for clients, I don't think i've ever heard of anyone get an answer that said..yep, i saw fraud.

What would make more sense is if these questions were aimed at the non-VPs and officers, to the lower/middle rungs of the totem pole, where will people will be more willing to reveal information anonymously. How about a public accounting hotline..where anyone in a company can dial their auditor anonymously to report any unethical activity? Now that just might work sometimes.

Comments

Krupo said…
"Snitch" hotlines do exist in many companies, actually. :)
notfordisplay said…
That wasn't what I was referring to, these hotlines too exist and are part of our control testing. But an added tool would be a hotline for employees to auditors. You never know how these calls to within your company can be handled.
Krupo said…
Fair enough. Some of those calls are, however, handled by third-parties to diminish that concern. It still matters who those third-parties report to, of course.

Another version of that is the hotline for customers to call auditors if their investment bank statement is incorrect. Some of my friends have been the person who's taking those calls. Hee hee.

I have, however, also seen procedures where auditors in fact do ask those questions of mid-level employees. For SOX in particular.

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