Case 8-13 Mohamed Salem El-Hadad, Internal Auditor 1. Identify and briefly describe the legal protections that “whistleblowers” have in the United States. Sarbanes-Oxley Act Section 806: Whistleblower Protection “SEC. 806. PROTECTION FOR EMPLOYEES OF PUBLICLY TRADED COMPANIES WHO PROVIDE EVIDENCE OF FRAUD. ” “Sec. 1514A.
Civil action to protect against retaliation in fraud cases (a) WHISTLEBLOWER PROTECTION FOR EMPLOYEES OF PUBLICLY TRADED COMPANIES- No company with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U. S. C. 78l), or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U. S. C. 8o(d)), or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee— (1) to provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of section 1341, 1343, 1344, or 1348, any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders, when the information or assistance is provided to or the investigation is conducted by– (A) a Federal regulatory or law enforcement agency; (B) any Member of Congress or any committee of Congress; or (C) a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct) (sox-online. com/act). As stated above employees are protected against any retaliation from employers concerning their job position. 2. Should U. S. companies integrate legal protections for internal whistleblowers into their internal control systems? Defend your answer. I think that U. S companies should integrate legal protections for internal whistleblowers into their internal control systems. Doing so will give employees the confidence to expose fraudulent and illegal activity. Otherwise an individual will not step forward with information regarding illegal matters because of the penalties they will have to pay. Some employers have the power to prevent individuals from obtaining jobs in the same field by giving bad references. 3.
Suppose that during your career you discover a fraud similar to that uncovered by Mohamed Salem El-Hadad. List specific measure that you could take to protect yourself from recriminations by your employer or other parties. A few steps one could take to protect themselves from recriminations by their employer or other parties are: Document any suspicions, take pictures, record phone conversations. Keep records of all items that might cause problems in the future. 4. Did El-Hadad face an ethical or moral dilemma when he discovered the fraud being perpetrated by his superior and friend? Before responding, define ethical dilemma and moral dilemma.
An ethical dilemma is a circumstance that a person faces concerning a decision about proper behavior. It usually involves a situation in which the wellbeing of one or more other individuals is affected by the outcome of the decision. A moral dilemma is a situation that an individual faces involving a decision about whether an act is ethical. El-Hadad faced an ethical dilemma when he discovered the fraud being committed by his superior and friend. Cites http://www. sox-online. com/act_section_806. html Knapp, M. C. (2013). Madoff Securities. In M. C. Knapp, Contemporary AuditingReal Issues And Cases Mason: South-Western. Whittington, R. (2012). Principles of Auditing & Other Assurance Services. New York: McGraw- Hill/Irwin.