An accountant face the ethical dilemma of reporting discovered accounting violations to the Financial Accounting Standards Board. While it is an ethical accountant’s duty to report such violations, the dilemma arises in the ramifications of the reporting. Government review of company financial records and the bad press caused by an accounting scandal could cause the company’s rapid decline and may lead to layoff of employees. Executives and other corporate officers could also face criminal prosecution, leading to heavy and prison time.

Matthew Lee, a senior vice-president in Lehman’s finance division, outlined six allegations of unethical accounting in memo sent on 16 May 2008 to Lehman’s senior managers, who asked Ernst &Young to investigate. In discussion with partners at Ernst& Young, he highlighted controversial “ repo 105” transactions that artificially boosted Lehman’s balance sheet by $50 bn. However, the London-based accounting firm took” virtually no action” and Lee lost his job.

Whistle-blower come forward publicly when something illegal or unethical is going on in their organizations are they do not receive an acceptable reply internally when communicating concern. Whistle-blowers are often ostracized in their companies and face the dilemma of protecting their employer or stepping forward when something inappropriate is going on. Whistle blowing brings two moral values, fairness and loyalty, into conflict.

Whistle blowing can lead to a breakdown of trust. Most companies has its own HR department and employees are highly encouraged to talk to HR staff if they are uncomfortable with activities going on in their division or the company. In such way, it help employees release stress, more importantly, this will give the company a chance to make change internally before the negative message spread out. However, when there is a whistleblowing activities going on in the organization, the working relationships among employees will become intense.

With respect to the organization, whittle-blowing behavior will most likely hurt company’s public image and the company will be facing the risk of losing customers, profits and potential opportunities. In the example above, Depending on the size of the company in the market, the damage will also be varied. However, if the manager team already aware of the illegal activities or even involved in this unethical activities, they might expect to fact fallout if words get out. According to the research “Seventy-four percent of the whistle-blowers in my review were terminated. Another 6 percent were suspended and 5 percent were transferred against their wished. The remaining 15 percent were given poor evaluations, demoted or harassed” (Patrick, October 2010). In the Lehman brothers’ example, Matthew officially lost his job as part of a broader downsizing. According what Matthew’s lawyer said to the Wall street Journal, “It was just easier to shut him up and let him go”. People who are doing the right things for the companies are all end up being punished, which is undoubtedly tragic. However, although whistle blowing will hurt both organization and the actual whistleblower, it does has the benefits for the society as whole.

Effects: http://smallbusiness.chron.com/hazards-whistleblowing-effects-workplace-15733.html