Sean Morgan is the owner of a local CPA firm with four separate offices. He and

Question

Sean Morgan is the owner of a local CPA firm with four separate offices. He and his wife started the firm over 20 years ago, and have over 50 full-time employees. Recently, he discovered that one of his employees had stolen $20,000 from the business during the past six months because of lax internal control. Sean was furious about the situation, but was uncertain about whether he should initiate a criminal investigation of just fire the employee. List: 1. Three reasons why Sean should have the employee prosecuted. 2. Three reasons why Sean might not want to seek prosecution of his employee. If you were Sean, what would you do?

Explanation / Answer

1. The three reasons why Sean should have the employee prosecuted are as follows :-

* There are very possible chances that the fact may come into light regarding the amount stolen.

* It creates a trust among its clients about the organisation / firm regarding its proper and timely decisions adopted in case of necessity.

*Also if there are any other persons involved in this other than the person found guilty, even their details can be found out and proper action can be initiated against them. If such action by way of prosecution is initiated by Sean, the chances of such actions which may occur in future might come down because the other employees will behave properly and will not indulge in such activities since they are aware that if such things happens in future , the management will take strict actions.

2. The three reasons why Sean might not want to seek prosecution may be :-

* It may create an unsafe feeling amongst its customers or clients regarding its improper management.

* He might be of an idea that the employee who had committed the theft was a good man but his difficult situations might forced him to do so.

* He might have thought that this was lack of his proper control in the firm and such may be avoided in future by implementing proper internal control measures.

3. If I was Sean , I would have initiated the prosecution because even if the internal control measures are not proper, the employees should behave in an ethical manner by follow or adopting proper moral principles and also I would take steps to see that the internal controls are framed and implemented in such a way that these type of incidents will not happen in future.

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