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Financial Accounting 1 Discussion Questions

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Financial Accounting 1 Discussion Questions
Tom Brown, the controller for MicroTech Software Company, is responsible for preparing the company’s financial statements. He learns that sales for the first quarter of the year have dropped so dramatically that the company is in danger of bankruptcy. As a result, he applies for an accounting position with another software company that competes with MicroTech. During his job interview, Tom is asked why he wants to leave MicroTech. He replies truthfully, “The company sales are down another 10 percent this quarter. I fear they will go out of business.” At that time, MicroTech had not released its sales results to the public. What are your thoughts on Tom’s discussion with the competitor? Is this legal and/or ethical? Please post your comments. |

I believe Tom was completely unethical in releasing information on his current employers financial status to a competitor. While he was giving an honest answer, Tom most likely violated a legal contract with MicroTech by telling them most what was most likely classified information. The information Tom released was not entirely factual because while the drop in sales may have put the company in danger of bankruptcy, it is not a sure thing and it may not happen. If MicroTech were to discover that Tom gave a competitor information regarding their financial status especially, if it was negative and possibly not true, Tom could face legal trouble with the company such as a lawsuit for slander and disclosing confidential information. Even if MicroTech was definitely filing for bankruptcy and even if it was a publically known fact that it was, it would still be unethical and inappropriate for Tom to discuss the financial situation of his current employer in an interview even if it wasn’t a
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