Read about “Undisclosed Losses”

The Office of the Treasurer operates an investment pool. Owing to risky investments and an increase in interest rates, the market value of pool securities has substantially declined.

By publicizing the decline, the office would likely cause a run on the pool, thereby assuring that all participants would incur losses. By concealing the decline and preventing the run, the office would likely be able to recover its losses.

Presently and in the future the treasurer has obviously opted to conceal the losses.

What are the consequences and implications of the Treasurer’s Actions to the pool participants, the financial reports and the Treasurer?

Answer rating: 100% (QA)

If the treasurer discloses the losses then it is likely that there will be a run on the fund and a... View the full answer