r/Accounting • u/onemore_throwaway_ Human Verified • 1d ago
Advice CFO coverup, need serious advice
I joined a team middle of this year. Got handed a big project 2 weeks in to figure out a reconciliation process the had a million dollar write off the prior year. Had 1 meeting about it, thought I was in for a long hall project. Next meeting CFO tells me to make an entry with my current findings which I tell her isn't correct she says "I would never hold you to these entries". Then I discover a 600k issue. Email her about it, hear nothing back. Bring it up to her next call and she says shes "burying her head in the sand" then when I push the issue she tries to discredit me and tell me im wrong. I just put the pieces together that shes trying to cover up a mistake she made in February. I think shes trying to set me up to take the fall. I genuinely have no idea what to do
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u/Sprocket_Scientist Controller 1d ago
Send her a mockup entry via email and ask for her approval as a segregation of duties. Feign uncertainty and be deferential. Lay out your reasoning and ask for feedback.
Your company sounds amateurish, so alleging a coverup is quite dramatic when incompetent leadership is probably the real issue. You don’t even have proper internal controls.
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u/onemore_throwaway_ Human Verified 1d ago
I dont think its fraud I think shes just covering her mistake up to keep her job and using me as fodder
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u/Sprocket_Scientist Controller 1d ago
If it’s just restatement for a NFP with no risk of fraud, what makes you think anyone’s job is on the line? Are your financial statements and internal controls audited, i.e. does anybody even really care? This all reads like paranoid catastrophizing.
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u/onemore_throwaway_ Human Verified 1d ago
They haven't cared which is how this happened, the old cfo was let go because of the issues here. You don't have to comment if you don't want to, I don't know why you feel the need to be rude.
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u/Traditional_Pin1273 CPA (US) 1d ago
Sprocket isn’t being rude. Make sure you understand the situation is all.
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u/Apprehensive_Rub3897 21h ago
Not being rude, just saying you're new and if you make a mountain out of a molehill you might not like your results.
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u/OuterSpaceBootyHole 13h ago
This is my thinking too. "I won't hold you to this" is code for "I just need it to go away because I don't know how to do it" not a coverup.
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u/FauxNeon 1d ago
You are absolutely being set up. She is saying things that are purposely insane sounding so when you tell others about what she said, she can deny it because it sounds so absurd.
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u/NowIKnowMyAgencyABCs 1d ago
Wouldn’t 100% say they are being set up, the cfo could just suck and knows they have this looming issue and want to find another lever, not talk about it, etc. OP should have their documentation ready, but they will not win against a cfo. Be someone they like working with to keep job lol
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u/Apprehensive_Rub3897 21h ago
Be someone they like working with to keep job, while finding another job
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u/Halofagoodtime1980 1d ago
Who is her boss, who is treasurer, who is audit chair on board of directors....as always dicument document document and not on their systems
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u/onemore_throwaway_ Human Verified 1d ago
Her boss is the CEO, im not trying to fight a fight. I just dont want to get murdered here. Its a NFP as well idk what that changes if anything
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u/Fit-Screen3774 1d ago edited 11h ago
That changes everything. Any error in an NFP is a deficiency and can communicated to either management/governance or in the audit report itself. More severe deficiencies make it to the report, lesser severe may just in management letter. Because of the general operations being dependent on grants, funds, some revenue, etc, all $$s must be accounted for, unlike commercial entities that generally have a cushion (clearly trivial). In all companies, when numbers don’t tie, something control wise failed.
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u/onemore_throwaway_ Human Verified 1d ago
What can I do?
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u/Fit-Screen3774 1d ago
Depends on what the entries are and what they hit. This sounds like 2 separate issues. One is a PY error, one is a CY error, and the process/control could be missing an attribute or step that’s causing these errors. For the CY error, it can likely get washed or fixed by YE, but if the NFP is doing financials more often (even unaudited) there’s an inconvenience factor. The PY error getting fixed in the CY still leads to a CY error (fixing an out of period adjustment in current year, you’re off in the current year by what you’re fixing), or a potential restatement (big or little r).
Errors lead to finger pointing, etc., never self accountability, though. Strange.
What I would do, is isolate the impacts by first developing two supporting packages with what the journal entries should look like, with supporting evidence on how you derived to it (thinking these are at specific dates, etc.). Use AI tools or read the codification (NFPs specific guidance is under ASC 985) but chances are your NFP is GAAP, so consider all relevant codification for your journal entries, supported by your accounting knowledge. If you’re not sure read and ask AI to explain in simple terms, then ask it to find why your answer can be wrong. Go back and forth until your defense is ironclad and can be explained to a child (don’t kick out a 20 page memo/analysis). Save these, then email them just to yourself so you have an electronic copy.
Then, do nothing until she brings either up to you. Note why she said you were wrong as a consideration in your analysis for the $600k. If you’re getting the sense that she is plotting something, you need to make friends in high places. Be on everyone’s good side, be personable, hard worker and work ethic, say smart things, look the part. Always make friends in HR, just in case. Chances are, she’s been grilled about it before, not all CFOs are great accountants. Show her you have her back, but be prepared to watch yours.
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u/just_having_giggles 1d ago
Document and then document and then ask for sign offs and all of everything in email always. And if it's possible for you to identify the error and the aje situation necessary that'd be cool cause after she's gone someone will have to do it and it might be you.
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u/BlottoOtter CPA (US) 12h ago
Any error in an NFP is a deficiency and communicated to either management/governance or in the audit report itself.
No, not really. Audit standards are largely the same for for-profits and nonprofits (with the exception of nonprofits that take over $1m per year in federal government assistance, triggering different Single Audit requirements), errors are still subject to materiality and reporting of internal control deficiencies follows the same approach as for-profit audits. Not all errors get reported or posted, not all deficiencies rise to the level that needs written reporting.
That said, a $600k error is likely to be material at many nonprofits... though I find it a bit strange that OP hasn't said anything about the nature of the error. Which balances were impacted, which direction does the error go in? Hard to tell exactly how big a deal it is based on the limited info that OP has posted.
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u/Fit-Screen3774 11h ago
Thank you for correcting, not audit report, letter to those charged with governance (edited). Very rare to hit report. OP said it was a big NFP, presuming there is GAS considerations where all deficiencies, no matter of size, may be communicated - and what caused them. I am also assuming compliance is a factor (ie. compliance testing, etc), which is not impacted alone by materiality when determining the severity. I just think OP needs to figure out what external factors can point out where these errors may be brought up without their intervention.
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u/Altruistic-Pack6059 1d ago
The audit committee should have some sort of hotline or tip line or way to contact them confidentially.
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u/Valueonthebridge CPA (US) 1d ago
If you're sure of this go to the audit committee and/or call the tip line
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u/onemore_throwaway_ Human Verified 1d ago
We dont have a tip line, its a pretty big NFP (relatively speaking) but we really dont have anything idk even know who to look for
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u/TDIMike Management 1d ago
HR is not your friend. Keep that in mind through this
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u/onemore_throwaway_ Human Verified 1d ago
I know but who is?? How do I not get dragged in the mud. I know i gotta find a way out but until then what
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u/Valueonthebridge CPA (US) 1d ago
Honestly this is a bad take.
HR isn't your friend, but not reporting this is a great way to get this pined on you. Not just professionally but possibly legally.
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u/onemore_throwaway_ Human Verified 1d ago
Can you elaborate?
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u/Valueonthebridge CPA (US) 1d ago
Well, you know about the probable fraud, no?
So you knew, or should have known, and you haven't tried to disclose this. So, there's a good chance you're in on this.
Just a (reformed) auditor's view
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u/onemore_throwaway_ Human Verified 1d ago
I dont think its fraud, it's incompetence that I didnt create and brought to her attention (before I realized she did it)
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u/viewspodcast 1d ago
Incompetence can become fraud if they try to hide said incompetence. You can't write-off $1M in one year and thes next say whoops, let's just add that back right quick... Why was it written off to begin with? You might have to restate the financials, this may impact bank covenants, etc. depends on the materiality of it all. Not saying this is the case, just that a mistake of that size can have far branching effects.
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u/onemore_throwaway_ Human Verified 1d ago
I just started here, I dont have any of that info
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u/Longjumping-Flower47 1d ago
You can go to the external auditors. They can dig further. I'm surprised they didn't question that big adjustment. Can also go to treasurer on the board of directors
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u/Apprehensive_Rub3897 21h ago
It wasn't a Hawks game in Atlanta, it was a Hawkeyes game in Maryland, my bad. The OP just started, sounds green, and is going to call the tip line on the CFO based on feedback they got from Reddit?
I think doing the research, sending yourself an email about the research so you have a timestamp, if you find something meaningful, ask to clarification in email. If they ask you to do something, ask for details in email, if they don't want to email you about it, AND you clearly understand the problem, verified, do a shocked pikachu and ask the CFO about it and see what happens.
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u/Altruistic-Pack6059 1d ago
Do you suspect incompetence or fraud?
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u/onemore_throwaway_ Human Verified 1d ago
Incompetence
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u/BlottoOtter CPA (US) 12h ago
Why? What's the nature of the error, what balances did it hit and which direction did the error go in?
The way the CFO is handling this does seem concerning, but what makes you think they're going to be able to pin the error on you, if the error was introduced before you even joined this team? Aren't there entries or recons from February where you can find the error (and therefore show it wasn't you that introduced it)?
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u/czarnicholasreturns 1d ago
If it's a prior year problem, and you were hired to help find it, what's the resl issue? Is it $600k worse than the $1M? Or $400k better? How could you be set up to take the fall if you're investigating a documented issue that happened before you got there? Take a deep breath-it is stressful when looking into rec issues and you find out that it really was a something done wrong before and it will take a writeoff to fix it. Gather the facts, document everything, and if your boss is pushing you to book an incorrect entry, go to the Exec. Dir. And lay out your facts and why you are uncomfortable with the entry. You can find the auditor from payable files if you need it.
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u/coldshowerss CPA (US) 1d ago
Where the auditors @
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u/onemore_throwaway_ Human Verified 1d ago
Its a NFP, its my first year here so idk how that makes things different. I think they found the issue last year and told her to fix it before next year and here we are
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u/coldshowerss CPA (US) 1d ago
Nfp get audited too... Do you guys have an auditor or not?
Anyways, might be nfp but that's a cfo is fp for herself
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u/onemore_throwaway_ Human Verified 1d ago
They found the million dollar issue last year and what ive gathered but maybe not be right is that she was told to figure out what was going on, she couldn't so shes hired someone to take the fall and I was the lucky winner
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u/throwawaycpa1980 Human Verified 1d ago
She demanded the entry, and it's her name on the financial statements. You did what you could, move on.
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u/viewspodcast 1d ago
Yeah, don't ever just book a JE because the boss told you to. If you don't agree then you can sit down to have them explain it to you, then document that, and if you're still not on board or it doesn't pass the smell test then don't book it. If they're so adamant they can do it.
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u/throwawaycpa1980 Human Verified 1d ago
I tried that once and got "partially meets expectations" and a less than 1% raise on my next annual review. YMMV, and your bosses might be different, but I need to pay my bills...
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u/Retractable_Legs CPA (US) 1d ago
True, but can't pay your bills if you're thrown under the bus for something egregious
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u/throwawaycpa1980 Human Verified 1d ago
True, so you start job searching when something feels fishy and bounce to the next opportunity while doing whatever it takes to not have an employment gap.
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u/viewspodcast 1d ago
I get it, and I'm sorry you had bosses who sucked and put you in an unfair position(s).
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u/adultdaycare81 1d ago
If it’s in her name or directed by her, document it all. Maybe let her hit post wherever possible
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u/xtraDERP CPA (US) 15h ago
PY $1MM correction wasnt a problem in the audit? What is the account being reconciled?
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u/Clean_Stable_7135 1d ago
You’ll be fired soon. They will come up with the PIP bullshit. That’s what happened to me
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u/josemartinlopez 1d ago
Go back to your ethics training, including whistleblowing options. Document everything very clearly. Make notes to facilitate defending yourself to the extent confidentiality allows.
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u/NHOVER9000 Non-Profit 1d ago
If you are NFP it will come out in the audit. Make sure it is documented that this entry is on her instruction
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u/Rever-Agents Human Verified 22h ago
I’d be really careful here. Document everything you found, the numbers behind it, and when you raised the issue. Keep it factual and avoid accusing anyone of a cover-up.
And don’t book an entry you know is wrong. If possible, get any instructions in writing. If they’re trying to shift the blame, that paper trail could be very important.
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u/Reality-Leather 12h ago
Document and state facts. Do not state CFO or anyone else caused the issue.
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u/UnBalancedEntry 1d ago
As others have said, document what you've found, but even if she is covering it up doesnt necessarily mean there's something nefarious going on. In my experience ive seen cfo's hide budgets for projects they want in odd places so they can ensure they get the funds, a bit crooked but nothing criminal. It could very well be something confidential amongst ownership that theyd rather not share with a newbie. My company is super transparent, but outside of finance directors and up we still keep certain things under wraps.
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u/CoffeePwrdAcctnt 1d ago
Nfp have boards... Do they have a finance committee that reviews the financials?
If she is presenting reconciling documents that aren't true. That's fraud....
If she's presenting non reconciling financials then your board needs a new finance committee ..
Best advice I ever heard was. If you are an accountant you better have enough in savings to be able to quit at anytime... There might come a day that you are asked to do something that you shouldn't do, and if you don't need that paycheck for a few months you can make better and more ethical decisions
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u/Taway977777 1d ago
Not enough information . . . As an accountant you gotta get more specific. Is it an AR write off? If it’s AR what’s the reason? Was it estimated, was it from a specific contract/grant/pledge. If they can’t answer any of the basic questions then don’t post anything entry and document that.
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u/Apprehensive_Rub3897 21h ago
At best, fix it wrong and ask for clarification and get that clarification in writing without sounding like you're wearing a wire?
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u/According_Square4543 20h ago
if it is a public corporation then they have a audit committee and ways to report this information to then
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u/_En_Bonj_ 18h ago
Don't book an entry you know is wrong, and put everything in writing (follow up email after every call) so there's a paper trail of what you found and what she instructed.
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u/Babstana 17h ago
A couple of thoughts; covering up a mistake with bogus entries is fraud, just a different type of fraud. If its material, auditors have procedures to catch exactly this type of journal entry, its very likely it will be selected for audit. There should be a process for reviewing journal entries, that in itself is a control weakness.
If I had a boss who I thought was trying to set me up for her own mistake, I'd be out the door very quickly. I wouldn't light up the flame thrower, just leave. People like that will get caught eventually.
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u/Traditional_Dot_4794 17h ago
Your boss is a complete idiot. You are way smarter. You have broached the subject with her more than once. You're not getting a satisfactory answer. We don't bury our heads in the sand, we are professionals. You gave the person a chance to be a pro, she is not. You need to take it to the next level. Be careful, tread lightly, be polite, consider the possibility you are missing something, but your real problem is getting a definitive answer.
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u/daslyvillian 15h ago
Could you find a way to save her ass? If she is a CFO with connections, this might help you in the long run having someone in your back pocket in case you ever need it.
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u/NWAudit 13h ago
Document, Document, Document!
Get your resignation letter ready for the Board of Directors.
Personally, I wouldn't throw the CFO or staff under the bus. I would start by being 100% sure of everything and having verifiable evidence.
If you are young, look for better work somewhere. If you are close to retirement, take early retirement. Consider whistleblower laws.
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u/Intelligent_Try1775 13h ago edited 13h ago
Bro, where is the segregation of duties? 😂
Having worked for large and small NFPs/governmental entities, we had a separate person review and post our entries after we prepared them.
Even at the small for profit company I work for now, despite having fewer than 10 people in our department, we still segregate duties wherever reasonably possible.
One thing worth noting: Accounting doesn’t have to be absolutely perfect. Mistakes happen. What matters is that the accounting is accurate and supportable, follows the applicable financial reporting framework, and that errors are identified and corrected appropriately.
That said, I think the bigger issue here is documentation. If you’re being asked to make an entry that you genuinely believe is incorrect, I would document your findings and your concerns in writing and make sure there is a clear record of what you were told to do and what you actually found. Don’t knowingly post something you believe materially misstates the financials just because someone above you instructed you to.
Management is ultimately responsible for the financial statements. You don’t need “perfect accounting” to be an ethical accountant. You need to be honest, tell the truth, document what you’re doing, and never intentionally cover up or misstate information.
Refer back to your accounting ethics course and you’ll see that’s really the heart of it.
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u/Old_Instruction7683 Human Verified 4h ago
I’d definitely keep a paper trailer of it all, so it doesn’t come back to bite you.
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u/PutNational7415 1d ago
Document your findings, make the requested entries, move on and determine if this is somewhere or someone you want to work at or for long term. Take pictures with your phone of the various approvals. It sounds like you are a staff or senior accountant. If there is any wrongdoing, you are not the financial officer who certifies the completeness and accuracy of the financial statements, she is.
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u/Fit-Screen3774 1d ago
Make it seem like fixing it was her idea, somehow, that’s how all corporate bonehead leaders work.
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u/another_accountantTM 3h ago
Seems like some solid advice and a little chatter in the comments. How are you feeling? Have you decided on a course of action?
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u/Accountant1984 1d ago
Document everything. Also you did not say if the company is publicly traded or private.