You are the auditor of Hitech Disposal Ltd., which owns and operates a large sanitary landfill in western Canada. During your examination for the current year, you become aware of rumours that the company is accepting a large amount of toxic chemicals at its site, in violation of its provincial waste management permit. Before you have time to raise the issue with the audit committee, the CFO takes you aside and says, “The audit committee will be very unhappy if there is any discussion of toxic chemicals on-site and any potential liabilities. The very mention of this would amount to a self-fulfilling prophecy, and bring in the regulators and lawsuits. It could bankrupt the company and throw hundreds of people out of work. You will have lost a valuable client, and I guarantee that you will never get another client in the waste disposal business. I personally assure you that any problematic chemicals will be removed from the site by the time the audit report is published.”

1. Outline your responsibilities in this situation, assuming the dumping of toxic waste in the landfill is deemed to have a direct effect on Hitech’s financial statements.

2.How would you respond to the CFO’s comments?

3.List some points you might make to the CFO. You do not need to prepare your answer using the case format for solving ethical dilemmas.

Answer rating: 100% (QA)

1 As a auditor my responsibility in this situation is to first obtain all the information about the ... View the full answer