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Case Ref: 092
Mike’s Fight: false accounting
Mike, a CPA was the treasurer of the parents teachers association of the
private school which his two children attended. The treasurer’s position was
completely voluntary. The parents teachers association raised substantial
funds and had an annual expenditure budget, but no formal treasurer’s
reports had ever been made. The Chairman of the association thought that it
was time to clarify the association’s financial picture.
The association’s records and funds were kept in school accounts under
the supervision of the School Secretary. When Mike attempted to track
inflows and outflows of fund, it became apparent that the actual expenditures
were not consistent with the approved budget. The cash balance was a
“floating” number that changed from one month to the next without a full
explanation.
There were also discrepancies between the cash inflows
reported by the parents who ran the fund-raising events and the cash inflows
reported in the school accounts.
Mike tried to approach the School Secretary in order to get clear
information, but repeatedly met with vague and evasive responses. He did
not have access to the school’s accounts for its funds, and thus lacked
important information to determine what kind of problems there were.
Mike’s problem was compounded by the fact that his son’s academic
standard and behaviour problems were a matter of repeated discussion with
the school’s principal.
Mike was not certain about what his professional obligation was in this
position, nor whether any action he took might place his son in jeopardy.
What should Mike so? Should he put up a fight?
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