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The Anonymous Caller
1) If I were Dr. Mitchell, I would recommend that the caller report to the Board of Directors. The audit committee should have ensured that the Board of Directors established a whistleblower program, thus, the caller should be protected and have someone to report her findings to. By continuing to work with the company, she is essentially becoming part of the problem. Simply not adding her signature only goes so far; there are many ways the CEO can conduct fraud that does not require her approval. Though she could resign, she could easily be replaced with someone that would go along with the CEO’s scheme for fraud. And if the company does get charged for fraud, she could be charged as well for having knowledge of it and not reporting it. The State Board of Accountancy would be a great place to start since they promote dialogue amongst accountants to address their issues.
2) No, she should not report to the bank any fraud she found because that is not her job. She should report her findings to the appropriate people, and let them handle it. Her taking action into her own hands is like her playing cop and that could simple lead to more issues.
3) If the company has a whistleblower program in place, then she can report the fraud to the Board of Directors or even the Audit Committee. If she were to consult external auditors, she may be violating several laws about confidentiality, thus she should keep simply report to the audit committee.
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