Take the Money and Run: White Collar Crime at Dhr Patio Homes, Llc
Sherman, Herbert, Rowley, Daniel J., Journal of the International Academy for Case Studies
This is a field-based disguised case which describes how a small family business deals with crimes committed by a trusted employee. The problem for the characters in question is how to deal with their most trusted employee, someone they treated like a family member, who they discovered had stolen nearly $25,000 from them over a two year period. Several factors complicate the owners' decision as to how to proceed: the person in question was their most tenured employee and had become part of the family, the employee and his family were renting a house built by the protagonists for the employee until the employee could establish his own credit, and the employee's brother worked for the firm. The case has a difficulty level appropriate for a sophomore or junior level course in business ethics or small business management. The case is designed to be taught in one class period (may vary from fifty to one hundred minutes depending upon the course structure and the instructional approach employed, see instructor's note) and is expected to require between four to eight hours of outside preparation by students (again, depending upon instructor's choice of class preparation method).
Derived from observation, field interviews, and e-mails, the case describes how two college professors operating several businesses were confronted with the fact that their most senior and competent employee appeared to have purloined nearly $25,000 in company funds. The employee in question, Alan Thompson, was originally hired with his wife Wilma to finish basements in Davis and Hodgetts' rental units. This project was such a success that as the business moved into private home construction Alan became the defacto on-the-job contractor. Growth in their business cost them their bookkeeper and they secured the services of James Carroll, CPA for the firm. When examining the firms' books, Mr. Carroll noticed that certain expenses were either for personal items or duplicates for similar expenses incurred a short time ago. An audit indicated that Alan Thompson was the culprit for these expenses as well as the fact that several charge card receipts had a signature that was not Mr. Thompson's. Davis and Hodgetts had to decide what if any legal action would they take, if they wanted to try to recover any of the stolen funds and if so, how; and how do they want to confront Alan with their findings?
According to Justice Department estimates, nearly 30% of the nation's employees are hardcore pilferers, and up to 80% will steal if no active security measures are in place. Internal theft is costing businesses more than $60 billion a year. The impact of stealing on small business is especially telling: US Chamber of Commerce statistics show 50% of the failures within the first year of business can be linked to sticky fingers.l Formby and Williams noted that "there are 2 types of internal theft - theft of cash and theft of merchandise. Opportunities for theft of cash are available at the cash register, in the credit department, or in payroll or other bookkeeping functions. Merchandise thefts can range from employees taking small items home in their pockets to complex operations. The following factors can determine the extent to which internal theft problems may be correctable: 1. The employer must be aware of the problem. 2. The employer must realize that anyone is a possible offender. 3. The employer must be willing to make security revisions. 4. The system must be evaluated constantly."2
Since employee theft has been well documented over the past twenty years and received much press coverage as of late, thanks to the Enron debacle, one would have thought that theft in the workplace would be expected, detected, punished, and eventually minimized. However, Joshua Kuarantzick indicated that nothing has changed in terms of employee theft in the post Enron era. "Lying and dishonesty simply have become a much more accepted part of business - and of American life. ... Greed still rules the day."3 Worse, the lack of legal, no less moral, behavior on the part of workers has extended not only their own materialism and avarice but has become so rampant as to have created "an engrained tolerance of [others'] lying and bad behavior."4 We have come to not only expect illegal and immoral business behavior, but in fact to accept it.
Ironically, this was not the case (pun intended) with Richard and Adrienne Davis and Stephen Hodgetts. They expected Alan Thompson and his wife Wilma to be of high moral character and disposition since Alan and Wilma had become an integral part of the family business; a positive attribute according to Ernest Doud Jr.. "Healthy family relationships drive businesses forward, whereas conflict-centered family relationships drive businesses down. Strength and unity of the family management team sends important messages to four key groups: employees; customers; suppliers; and competitors. Effective working relationships and a unified management team send good news that can pay dividends. Your employees will consider your business a good place to work. The dividend-a more productive work force."5
Yet the Davis's and Hodgetts should not have been shocked by the Alan's behavior. [Michelle] "Goodman lost her company because a trusted employee embezzled almost $ 1 million, which financially ruined her business. Bonnie J. Merrell was convicted of the crime and started a three year jail sentence last April, according to Maricopa County Superior Court records.... Small businesses tend to fall prey to this swindle because they often give too much financial control to one trusted employee, and often don't have the checks and balances in place to prevent it."6
The second irony is that, according to Anita Dennis, it is when the small firms that are doing well that they are the most susceptible to theft or fraud. "A risk of a strong economy is that small business clients may loosen their internal controls, discovering fraud or theft only long after it has happened. The most vulnerable are private companies in the $10 million to $30 million range because they are large enough to lose substantial sums but often not yet big enough for adequate finance departments. Employee resentment, misplaced trust and technology are elements that make fraud possible."7 Davis and Hodgetts' operation grew from a small home rental business to not one but two home construction companies - clearly a long term employee of the firm could interpret this growth as success, success that the employee might feel has lead to the inequitable distribution of wealth back to the owners.8
This research is phenomenological in nature and written by two of the characters in the case, the co-owners of the companies in question. This field-based case is disguised and derived from observation, field interviews, reflections, and e-mails.
INTENDED INSTRUCTIONAL AUDIENCE & PLACEMENT IN COURSE INSTRUCTION
This case was primarily developed for undergraduates taking a course in business ethics, although the context of the case, a small business, would also make the case suitable for a course in Small Business Management. The content of the case does include issues in human resource management (i.e. how should the firm now deal with Alan Thompson) and the legal environment of business (what are the legal ramifications of the alleged actions by Alan and Wilma Thompson) and therefore could also be utilized in these topic-driven functional courses. The case specifically deals with how a firm handles the discovery of embezzlement and fraud and should be introduced after the students have read material on white-collar crimes.9 The case also deals with employee theft, specifically credit card fraud and embezzlement, as well as conspiracy to commit a crime (the RICO act)10 - students may benefit from a review of this material.
In terms of a Business Ethics or Business and Society course, the case should be presented in conjunction with readings addressing the topic of the employees and the corporation11 and should be employed as either an end-of-chapter case (for chapter review purposes) or as a case to be read just prior to the chapter material (as an ice-breaking exercise). For a Small Business Management course, this case should be taught in concurrence with readings in managing employees, business law and crime prevention, and business ethics.12 Given the fact that these topics cover numerous text chapters, this case is more comprehensive in nature and should be employed towards the end of the semester, perhaps as a sectional review.
Although not originally intended for these purposes, the strong emphasis on legal issues (and the associated legal research) and the presence of a licensed accountant (with legal obligations) may provide for additional uses for this case. For example, this case may be quite appropriate for a legal environment of business course (a course usually required for business majors who are not majoring in accounting) given the fact that both criminal and contract law are addressed in the case. This case therefore could serve as a sectional or comprehensive case since it would be covering several issues addressed in the course, including business ethics.13
This case may also prove quite useful for students majoring in accounting since it not only describes the legal issues that would be covered in a Business Law I and Business Law II class (the typical classes taken by undergraduate students pursuing an accounting degree) but also the legal and ethical obligations of the accountant who uncovers the embezzlement and fraud discussed in the case. Please note that case question number two addresses this issue but only indirectly - the instructor would have to specify, perhaps in a separate question, that students should include the accountant in their analysis of stakeholder rights, responsibilities and obligations.14 Given the breadth of material that this case encompasses, it is strongly recommended that this case be used as a sectional case or comprehensive case since it addresses constitutional, criminal, and contract issues.
Regardless of the course in which this case is employed, instructors should be aware that students will have to perform secondary research in order to develop good, very good, and excellent answers to the questions posed in this teaching note. Instructors may decide to offset this need for research by cutting and pasting the secondary material from the case answers into a handout to distribute to their students.
The overall purpose of this case is to have students examine two critical and interrelated ethical issues; the uncovering of a white collar crime and the handling of the employee alleged to have committed that crime. This case in particular has practical value to students since many of them may find that they as general employees, supervisors, and in the future HRM specialists and business owners will have to deal with similar situations. Students are asked to probe beyond personalities and the immediacy of the moment and examine the underlying nuances of the posed problem.
Specific learning objectives are as follows:
1 For students to understand the legal ramifications and moral obligations associated with uncovering whitecollar crimes and to employ secondary research on these topics to support their case answers.
2 For students to analyze the legal options available to Davis and Hodgetts.
3 For students to develop a plan of action for Davis and Hodgetts including whether and how and if they were going to confront Alan Thompson with these allegations.
4. For students to decide whether and how the alleged stolen funds should be recovered.
Preparing the Student Prior to case Analysis
There are several approaches, not mutually exclusive, that an instructor may employ in terms of utilizing this case. It is strongly recommended that prior to reading this case, (regardless of the specific methodology employed) students be exposed to some material on embezzlement, forgery15 and the proper method for handling an employee suspected of committing a white collar crime.16 (see Appendix A. This may be used as a class handout if the instructor so chooses.) This will provide students with the proper perspective and allow them to recognize some of the legal and ethical issues embedded in the case.
This conceptual framework may be delivered prior to assigning the case by using at least one (1) of the follow methods:
* a short lecture and/or discussion session on the above noted topics.
* a reading assignment prior to reading the case that covers several of the topics mentioned.
* a short student presentation on each topic.
* a guest lecturer on one of the topics
* a literature search on the described topics.
Although most of the students in a business ethics or small business management course may have had some exposure to the case method, it behooves the instructor to provide the students with a review of the case method of analysis. In the traditional case method, the student assumes the role of a manager or consultant and therein takes a generalist approach to analyzing and solving the problems of an organization. This approach requires students to utilize all of their prior learning in other subject areas although the focus should be on the current course content. It is strongly suggested that students prepare for the case prior to class discussion, using the following recommendations :
* allow adequate time in preparing the case
* read the case at least twice
* focus on the key issues
* adopt the appropriate time frame
* draw on all your knowledge of business.17
The instructor's role in case analysis is one of a facilitator. The instructor helps to keep the class focused on the key issues; creates a classroom environment that encourages classroom discussion and creativity; bridges "theory to practice" by referring back to key concepts learned in this or prior courses; and challenges students' analyses in order to stimulate further learning and discussion. There are several variations of the aforementioned approach including: written assignments, oral presentations, team assignments, structured case competitions, and supplemental field work.18
Regardless of the variation employed, it is recommended that the students' work be evaluated and graded as partial fulfillment of the course's requirements. However, if this case is not employed as a comprehensive case, it is not recommended that this case (and its related assignments) have a large weight or impact on students' overall course standing.
Using case Questions
Whether or not the instructor assigns questions for students to analyze with the case is usually a matter of educational philosophy and student readiness. Naumes and Naumes, for example, thought that if the questions were handed out with the case "students will tend to focus only on the issues specifically raised by the questions .. ."19. Lynn, on the other hand, noted that the use of assignment questions provided students with more concrete guidance in case preparation and analysis; specifically directing them to consider the decision to be reached.20
In deciding whether or not to assign questions, the instructor should first answer the following questions:
1. What is the level of course instruction?
2. What type of case is being taught? (Iceberg, incident, illustrative, head, dialogue, application, data, issue, or prediction - see Lundberg et. al. for full descriptions.)21
3. What is the instructor's preliminary assessment of the students' ability to be selfdirected learners?
4 What are the students' previous experience with case instruction?
5. If the students have already been exposed to the case method, what types of cases have they been exposed to? case incidents (1-2 page cases with questions)? Short cases (3-8 page cases with and/or without case questions)? Comprehensive cases (greater than 8-15 pages) Harvard-style cases (greater than 15 pages)?22
6 What is the instructor's preferred method for case instruction? (For example, "sage on the stage", "guide on the side", "student as teacher" (student-lead discussions), "observer and final commentator" (open class discussion with faculty summation), etc....
Role-Playing (100 minutes)
Role-playing enacts a case and allows the students to explore the human, social, and political dynamics of a case situation. This case lends itself quite well to a two-part role playing exercise since it involves a rather simple situation with only three to four characters and therefore most of the class can role play in this exercise.
Prior to role-playing the case part
Prior to role-playing the case part, students should be asked to not only read the case part but to answer the following questions:
1. Who are the key participants in the case? Why?
2. What is the "role" of each of these participants in the organization?
3. What is their motivation or rationale for their behavior?
4. What is the dilemma that the character is facing and/or how can the character assist someone else in solving a problem?
The instructor may either go through these questions prior to case enactment or wait for the role playing exercise to be completed in order to use this material to debrief the class.
Step 1: Assignment of Roles & Instructions (10 minutes)
The class should form groups of three to four students with three of the students enacting the key roles in the case (Richard and Adrienne Davis, and Stephen Hodgetts) and the other acting as observer. The instructor should pass out a short reminder notice about participants staying within their roles.
Step 2: Enactment 1 - Deciding What to Do (20 minutes)
The student enacting the role of Richard Davis should be instructed to start the conversation, summarizing the situation. The instructions to the students playing Richard Davis is that he is highly hurt and offended by Alan Thompson's embezzlement. He wants to deal with this situation as quickly as possible yet he also wants to recover as much of the stolen money as possible. The instructions to the students playing Hodgetts is that although he is for pursuing legal action against Alan Thomson, he is most worried about what type of damage the Thompson's might do to the home that they are now renting from the firm. Adrienne Davis feels betrayed by the Alan and Wilma and just wants to put this whole incident behind her and the firm. The instructor should note how well each group enacts the role-play and offer suggestions (if necessary) if some groups seem a bit confused or lost.
Step 3: Debriefing 1 (20 minutes)
The instructor might want to ask the following questions:
* What was the results of the meeting? What did the Davis' and Hodgetts decide to do?
* How many groups decided to go to the police and file a complaint? If so, why?
* How many groups decided they needed to contact a lawyer, an accountant, or an alternative expert for advice?
* Did the Davis's and Hodgetts agree or disagree as to the actions they should take? If they disagreed, what were the reasons?
Step 4: Enactment 2 - The Confrontation (20 minutes)
Four roles will need to be enacted, those of the Davis', Hodgetts and Alan Thompson. The student enacting the role of Richard Davis should be instructed to start the conversation, with summarizing the situation and providing the evidence to support his accusations. The student enacting the part should be instructed to display Richard's emotions (hurt and offended) but to not to ver-dramatize the situation. The instructions to the students playing Hodgetts and Adrienne should be similar to those in the first exercise.
One method of role play would be to have the student playing Alan Thompson be given a set of choices as to how to enact this role. Those choices could include abject denial, silence, admitting guilt, admitting guilt but protecting his wife, or requesting that his lawyer be present during these discussions. This choice would not only increase the student's motivation to enact the role but also may provide some insight into the student's general outlook on the case. A second method would be for the instructor to assign a different role each student playing the role of Alan Thompson. This would allow, in the debriefing session, comparisons of results based upon how each group's Alan Thompson reacted to the accusations.
Step 5: Debriefing 2 (20 minutes)
The instructor might want to ask the following questions:
* How did Alan Thompson react to the accusations?
* In how many groups was Alan Thompson still retained by the firm? Why or why not?
* In how many groups did Davis and Hodgetts decide to contact the police and press legal charges? In how many groups was this a threat posed by Davis and Hodgetts?
* What were the results of the meeting?
The instructor should then have the class as a whole comment on the results of the role-play and determine with the class their overall sentiment towards DHR's problem. Students should also be given the opportunity to comment on the role-playing exercise as a learning instrument. The instructor might ask the class the following questions:
* Did this exercise animate the case? Did students get a "feel" for the issues surrounding the business offer?
* What were the strengths and weaknesses of the exercise? What changes would they make to the exercise given their experiences with it?
The debriefing session should produce closure for students by connecting the theory of ethical decision-making and trust with case specifics and the results of the role-playing exercise.
SUGGESTED CASE QUESTIONS
Please note that answers to these suggested case questions contain material from secondary sources not provided in the case. Students should be instructed to perform secondary research on the topics raised in each case question.
1. Explain how terms like embezzlement, forgery, and the RICO act might apply to this case.
The purpose of this question is to determine whether students understand the basic precepts of embezzlement, fraud and conspiracy; the underlying legal issues surrounding this case. Since this question solicits definitions from secondary sources, apoor answer to this question would be either a partial answer to this question (does not address all of the crimes listed in the question and/or describe the application to the case) or does not provide proper footnoting which would designate the sources of information.
Afair answer to this question would provide solely the definitions. "Embezzlement is defined as the misappropriation of items with which a person has been entrusted. Embezzlement differs from larceny in that the perpetrator of embezzlement comes into possession of property legally, but fraudulently assumes rights to it. Charges of embezzlement can even be levied if the embezzler intended to return the property later."23
Forgery is "the act of criminally making or altering a written instrument for the purpose of fraud or deceit; for example, signing another person's name to a check. To write payee's endorsement or signature on a check without the payee's permission or authority. The 'payee' of a check is the true owner or person to whom the check was payable."24
The RICO act refers to the conspiracy to commit a crime. "The RICO Act was passed by the United States Congress to enable persons financially injured by a pattern of criminal activity to seek redress through the state or federal courts. The RICO Act applies to a wide variety of crimes. Originally, the breadth of the RICO Act was intended to give law enforcement, and private persons, broad power to fight organized crime, whether "organized crime" was traditional mobsters, members of a drug ring, or gangsters. The RICO Act has over time, however, resulted in unforeseen applications."25
A good answer to this question would along with the definitions include examples from the case. For example, embezzlement would refer to any items purchased by Alan Thompson using the corporate credit card (the purchase is legal) but then bought either for his own use (i.e. Christmas tree, gasoline) or in order to be resold (i.e. tools). An act of forgery would have occurred if the signatures on some of the credit card receipts were definitely not Alan's although they were signed in his name. RICO would apply if Alan had conspired with his wife Wilma to embezzle these goods as well as planned with his wife for her to forge his name on credit card purchases.
An excellent answer might go beyond merely defining embezzlement, forgery, and RICO by providing more details. For example, "One of the most common instances of embezzlement in today's society is employee theft. Employees of many companies have access to company properly, creating the potential for embezzlement. Examples include such small crimes as theft of retail items, discounted sale of retail items, and theft from cash registers, but can also include the theft of millions by employees of large firms.
There are a number of warning signs of employee embezzlement. Some general indicators may include:
* Missing documents
* Delayed bank deposits
* Holes in accounting records
* A large drop in profits
* A jump in business with one particular customer
* Customers complaining about double billing
* Repeated duplicate payments
* Numerous outstanding checks or bills
* Disparity between accounts payable and receivable
* Disappearance of petty cash."26
In terms of forgery, "there are many kinds of forgery, especially subjected to punishment by statutes enacted by the national and state legislatures. ... The making of a whole written instrument in the name of another with a fraudulent intent is undoubtedly a sufficient making but a fraudulent insertion, alteration or erasure, even of a letter, in any material part of the instrument, whereby a new operation is given to it, will amount to a forgery; and this, although it be afterwards executed by a person ignorant of the deceit.
The fraudulent application of a true signature to a false instrument for which it was not intended or vice versa, will also be a forgery. For example, it is forgery in an individual who is requested to draw a will for a sick person in a particular way, instead of doing so, to insert legacies of his own head and then procuring the signature of such sick person to be affixed to the paper without revealing to him the legacies thus fraudulently inserted.
It has even been intimated that a party who makes a copy of a receipt and adds to such copy material words not in the original and then offers it in evidence on the ground that the original has been lost, may be prosecuted for forgery."27
Additional information on RICO may include the fact that "corporations have been sued under the RICO Act for allegedly distributing false advertisements; lawyers, bankers, accountants, and other professionals, have been sued under the RICO Act for allegedly assisting clients in organizing, or assisting in the organization of, schemes to defraud; spouses have been sued for allegedly concealing the value of marital assets in divorce proceedings; and, civil protest groups have been sued for intimidating and extorting the customers of the industries that the protest aimed to disrupt. Although Congress may not have intended these more unusual applications of the RICO Act, they can be legitimate uses of the RICO Act. If you have been injured by a violation of the RICO Act, you may sue the person who allegedly violated the Act and, if successful, recover a monetary award equivalent to three times the value of the properly you lost or that was stolen from you, plus the legal costs and fees you incurred to bring the lawsuit."28
An excellent answer may also describe additional laws that may have been violated by Alan Thompson. For example, if Alan found out about his wife's forgery and did nothing he would be an accessory to a crime after the fact. An accessory is one "who is not the chief actor in the perpetration of the offence, nor present at its performance, but is some way concerned therein, either before or after the fact committed. ... An accessory after the fact, is one who knowing a felony to have been committed, receives, relieves, comforts, or assists the felon."29 "Accessories after the fact are in general punishable with imprisonment (with or without hard labor) for a period not exceeding two years, but in the case of murder punishable by penal servitude for life, or not less than three years, or by imprisonment (with or without hard labor) to the extent of two years."30 Three points need to be met under this law:
a. Must have knowledge that a felony has been committed.
b. Must aid or assist the felon in some way.
c. The purpose of the aid must be to help the felon escape from the authorities.31
2. What are the rights, responsibilities, and obligations for each of the parties involved in this case?
Corporations and individuals alike are empowered by our constitution and our federal laws to own property and to maximize their own wealth (or the wealth of their stockholders). With those rights are attached responsibilities and obligations; both individuals and corporations must be held accountable for their actions.32 The purpose of this question is twofold: a) for students to be able to discern all of the stakeholders involved in the case; b) for students to determine what are the rights, responsibilities, and obligations of each of the stakeholders and how each of these rights, responsibilities, and obligations of each stakeholder impact one another.
A poor answer to this question would either leave out at last one of the two key stakeholder groups in this case (either the members of DHR Patio Homes or Alan and Wilma Thompson) and/or would omit at least one of the three factors (rights, responsibilities, and obligations) in the discussion of each party.
A fair answer will take a legalistic approach to this question, be overly general, and only focus on the two major parties in question. This answer might first start with a definition of the major three factors described in the question (rights, responsibilities, and obligations). A person's basic rights are those rights shared by all people and are spelled out in 'the law of the land' ; for the United States those rights would be described in the Bill of Rights and the United States Constitution. The 10th amendment to the constitution indicated that rights not delegated to the federal government would then be delegated to the state or the people (local government).33 A corporation's rights were not directly defined in the U.S. Constitution until after the Civil War. "Corporations were chartered for a specific limited purpose (for example, building a toll road or canal) and for a specific, limited period of time (usually 20 or 30 years). ... Congress had written the 14th Amendment to protect the rights of freed slaves, but in an 1886 decision (Santa Clara County v. Southern Pacific Railroad) this was expanded when the courts declared that no state shall deprive a corporation '. . . of life, liberty or property without due process of law'."34 The corporation, therefore, was awarded the same rights as any U.S. citizen. Since rights are defined by the law, responsibilities and obligations are based upon the law. "Civil law focuses on legal relationships between people and the protection of a person's rights. Criminal law focuses on wrongs against a person, property, or society."35
Based upon these definitions, the following answer may be presented in Table Form:
A good answer will have the student first realize that the situation has several complications, although the student may still employ a legalistic approach. First, Alan and Wilma Thompson may be accused of committing different crimes (Alan embezzlement, Wilma forgery) by DHR Patio Homes and there is still a question as to whether collusion is involved or if Alan may be an accessory to a crime after the fact. A good answer by a student may go beyond the legalistic framework with the student noting that Alan and Wilma have the right and obligation to protect themselves, their family (if they have one), and their business and should seek out legal counsel even before any charges are brought against them.
Secondly, DHR Patio Homes may claim a breach of contract with Alan and Wilma's A&W Construction LLC and not only terminate their services but also sue for damages relative to the embezzled amounts. A good answer by a student may indicate that DHR Patio Homes has the right and obligation to protect the interests of its stockholders (Richard, Adrienne, and Stephen) by pursuing the recovery of the stolen funds. DHR Patio Homes should also consult legal counsel and determine whether or not it is in the corporation's best interest to press legal charges along with seeking compensation for their lost funds.
Third, a good answer will denote that the accountant in this case has rights, responsibilities, and obligations relative to his client (DHR Patio Homes) and include student research on the AICPA code of conduct for accountants. The accountant certainly had the right to request and receive 'the books' from DHR's bookkeeper and to then familiarize himself with those books. Once the accountant suspected that non-business related charges were billed as expenses to Davis and Hodgetts' corporations, he had a responsibility and an obligation to his clients to:
* act professionally. "The quest for excellence is the essence of due care. Due care requires a member to discharge professional responsibilities with competence and diligence. It imposes the obligation to perform professional services to the best of a member's ability with concern for the best interest of those for whom the services are performed and consistent with the profession's responsibility to the public."36
* inform the client but to keep the information confidential. "Rule 301-Confidential client information. A member in public practice shall not disclose any confidential client information without the specific consent of the client."37
* act with integrity. "Integrity requires a member to be, among other things, honest and candid within the constraints of client confidentiality. Service and the public trust should not be subordinated to personal gain and advantage. "3S
The accountant, however, also has a responsibility to his profession and the public at large. For example, if the accountant does find erroneous reporting and/or illegal acts by his clients he is expected to act in the interest of the public, an act that may be in conflict with his clients' interests. "In discharging their professional responsibilities, members may encounter conflicting pressures from among each of those groups. In resolving those conflicts, members should act with integrity, guided by the precept that when members fulfill their responsibility to the public, clients' and employers' interests are best served."39 "Integrity can accommodate the inadvertent error and the honest difference of opinion; it cannot accommodate deceit or subordination of principle."40 In this case, the accountant is obligated to continue his audit of the firm's expenses in order to determine whether the expenses were