You serve as an outside director on the audit committee of SpaceTech, a company that supplies guidance

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You serve as an outside director on the audit committee of SpaceTech, a company that supplies guidance systems for military and civilian spacecraft. A recent internal audit uncovers instances where required protocols for safeguarding government secrets were not followed. Sally Sanders, the company’s chief of internal audit, decides that these problems are minor and easily corrected, and therefore are not a matter that needs to be brought to the committee. You find out about the issue only by asking probing questions at the audit committee meeting. In your opinion, the issue poses a risk to the company’s reputation and certainly should have been disclosed proactively. This is not the first time that Sally, in your opinion, has minimized the seriousness of audit findings; past remonstrations have not changed her behavior. Although you are upset, you also know that Sally is being groomed by the chief executive officer as his successor when he retires next year. What should you do?

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