Whistleblowing Is Important In The Accounting Profession

With the extremely competitive culture in business, companies are always looking for ways to separate themselves from the pack. Sadly, some individuals and businesses feel the need to engage in illegal, fraudulent activities to gain an advantage over competitors. Whistleblowing is the act of exposing the wrongdoings of an organization in the hopes of stopping it. Whistleblowing is an important practice that keeps business on a fair and level playing field.

Whistleblowing Prevents And Detects Fraudulent Activities In Business

While honesty and integrity are the staples of many businesses, not all companies follow the accounting guidelines provided by the Financial Accounting Standards Board (FASB). People who blow the whistle on these companies are doing the right thing and are acting in an ethical manner. Dr. Gary Bulmash, an accounting professor in the Robert H. Smith School of Business and an expert on financial accounting and auditing, believes the threat of whistleblowers acts as a deterrent to companies and individuals who are contemplating fraudulent acts to gain an illegal advantage. He explains this to me in an interview:

Also, it protects the stakeholders of a business from any negative repercussions from the unethical activities. People have the right to know the truth about what they are investing in, and whistleblowing is an important factor that helps to protect the truth.  Whistleblowing can uncover problems within the organization, as well as shine the spotlight on larger issues within the industry.

Whistleblowing Can Have Negative Effects As Well

While whistleblowing brings to light the negative actions taken by a company or individual, it can also have negative outcomes for the whistleblower. While laws prohibit a person from being terminated for blowing the whistle on a company, that person may be viewed as someone who cannot be trusted, and alienation within the company is a common consequence. There is a lot of added stress on the whistleblower, which gives witnesses of fraud reason to not come forward and blow the whistle on the company. In a large enough scandal, they could be involved in ugly lawsuits for years to come.

One Whistleblower Can Make A BIG Difference

In 2001, a multi-billion dollar scandal was uncovered that led to the bankruptcy off one of the largest American energy companies. Enron was cooking its books to hide billions of dollars of debt from failed projects. These fraudulent and unethical acts by upper management at Enron led the company to a ridiculously high stock price in 2000. Sherron Watkins, the former VP of Corporate Development at Enron, is considered the main whistleblower that uncovered the scandal. She was named as one of Time Magazine’s “People of the Year” in 2002. Had she not come forward, the scandal could have likely gone unnoticed, and the shareholders would have continued to be misled. While the company went bankrupt and thousands of people lost their jobs, Watkins did the ethical act and came forward through diversity to blow the whistle on the illegal activity.

It Is Important To Act If You Witness Illegal Activities At Work

With the unveiling of large corporate scandals such as Enron in recent years, new laws have been put into place to protect whistleblowers from repercussions from doing the right thing. The Sarbanes-Oxley Act of 2002 provides protection for employees of publicly traded companies who provide evidence of fraud.  It prohibits companies from discharging, demoting, suspending, threatening, harassing, or discriminating against the employee who committed the lawful and ethical act of blowing the whistle on illegal activities. Also, the United States Department of Labor created a Whistleblower Protection Program that provides assistance to whistleblowers that may face adversity because of their ethical actions. As displayed in the graph above, illegal activity in business is not going away. It is imperative that all employees are knowledgeable about fraud and know that they will be protected for doing the right thing. The following clip is from an anonymous individual on the street, and he explains how he defines whistleblowing. While he has the gist of the definition, it is clear that the general public must be more informed about their options when coming forward to "blow the whistle."

listen to ‘Whistle blowing question on the street’ on Audioboo

Question on the Street: What is Whistleblowing?

listen to ‘Whistle blowing question on the street’ on Audioboo

Whistleblowing in the Accounting Profession

What is Whistleblowing?

I will explain what whistleblowing is and when an individual is likely to feel it is necessary to blow the whistle on a person or business.

Why is Whistleblowing Important?

Whistleblowing is a hot topic right now due to the scandals that have rocked the business world in recent years. In 2002, two individuals from Enron and Worldcom were named Time’s people of the year because of their efforts in coming forward during serious, billion dollar scandals happening internally in their company. It is important to be ethical in business so people can always trust you to do the right thing.

Real World Example of Whistleblowing

In this section, I plan to demonstrate when/how an accountant can come forward in a scandal. I have not yet decided on which example to use because there are so many good ones. I will probably wait to choose a case until I talk with the expert.

Positive Effects of Whistleblowing

It can put an end to the fraudulent acts occurring in the company. It can change future policies that benefit employees and the company. It is the right thing to do, and it is ethical.

Negative Effects of Whistleblowing

People in the company may not trust you anymore. There is a lot of added stress that goes along with whistleblowing. You may be fired for going against the company. Employees may alienate you from them. You may have to go through litigation and deal with lawsuits.

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How People Use their iPads

In the study, there were 16 participants (half men, half women). They were all iPad users and most were between 21-50 years of age. They recruited individuals with differing occupations so that they can cover a sample with differing interests. They also made sure that the individuals participating in the study had prior experience with the iPad so that they could try to represent the average iPad user. Their iPad usage was tracked over a two month span.

iPads are used for media consumption

The study determined that the iPad is used mostly for media consumption, with a slight exception being email. Nearly all participants of the study used their iPads for games as well. They also used them for social networking, watching videos, and reading the news. They also determined that the people would share their iPads with other members of their family.

Websites designed for computers translate well to iPads

It was also determined that websites designed for desktop computers are readable and usable on the iPads. However, some websites tend to do a better job than others. An example is given regarding Virgin America’s large buttons, which make it easier for the users to click the correct items. They say that the site “leaves room for error.”

Apps are not as successful as websites

In their tests, they determined that it was easier for users to complete tasks on the Web than on apps. Apps contained less content than websites and were sometimes too confusing. Apps should make the user’s life easier, but the study showed that some apps make the user work more.

When designing an app, cater to the audience

The study gives tips on what to do if a company needs an app. They determined that it is important for the app to design for repeat users so the users have a reason to continue using the website. It is also important that the iPad app has a “secret weapon” compared to the website. It should deliver some sort of extra value, such as a recipe app that does not involve much scrolling or zooming in. This adds value because someone cooking would not want to have to continue touching their iPad or smartphone. They also state that the designer should design the iPad app as if it were an iPad app, rather than an iPhone app. The app should be user-friendly, and add value to the individuals using it.

The Participation Gap and Mobile Media

Participation Gap vs. Digital Divide

After reading the articles by Kevin Guidry and Aaron Smith, I believe there is a larger participation gap than digital divide in the United States. The “participation gap” expands beyond the simplistic view of the “digital divide” because nearly every American has some form of access to the Internet and other media devices. However, Americans have differing experiences with the Internet, and that shapes people’s understanding and perspective of the Internet. For example, if an individual has instant access to the Internet on their mobile device, they will have a very different understanding of the Internet than an individual who just owns a computer, or has to go to the library to use the Internet.  The use of the Internet with someone’s own device is much more personal and occurs on a more consistent basis. These experiences will greatly affect the way an individual illustrates the Internet and other media devices.

Mobile Trends and the Participation Gap

The growing use of mobile devices to access the Internet in the next 3-5 years will likely shrink the digital divide and the participation gap. With more people having access to the Internet than ever before, it is inevitable that the participation gap will decrease to the point where it is nonexistent. With 88% of US adults owning a cell phone, and 49% of all US adults using their cell phones for the Internet, the participation gap between cell phone Internet users and non-cell phone Internet users is become less definitive. While the digital divide still exists for individuals without Internet access at home, the number of people with mobile devices with Internet access is increasing, and thus the way people experience the Internet is changing to be more mobile.

The Mobile Audiences of the Future

Mobile audiences are growing and becoming a greater factor in the way companies and people present media to the public. Now, every website must ensure that it is accessible on a mobile device because that is many people’s preferred way of accessing the Internet. Eventually, I believe that mobile devices will greatly outnumber laptops and desktops. People prefer to be able to access the Internet whenever they possibly can, and mobile devices allow them to do just that. I predict the mobile audience to continue increasing over the next couple of years, and then it will eventually level off because everyone will have a mobile device.