what are some legal consequences for a controller who found the fradu, did noting, and just resigned?
Asked by Myung
There is a controller who found the fraud. He reported to upper management and external accountant. None of them listened to him, and tried to fix it. If the controller just resign the firm is there any legal consequences imposed on him? If the company gets caught after he resigned, could someone like bank or employee sue him because of his negligence (the company is not publicly held, it is ran by one family)?

Best Answer:
It is always the Managing director of the company who is liable for all deeds and misdeeds of the company. In this particular case, the controller has no liability and negligence does not mean that he committed the fraud !!, Please note that bank can sue only the MD of the company !!

to name one, accomplice after the fact
Answered by Scandimaniac

Because it is a private company, and because he attempted to report the fraud, he will likely not face any negative legal consequences. Form your email, it does not appear that he created the fraud, just discovered it. In this scenario, the upper management, external auditor, and owners would face legal consequences. If it were a public company he would have had to have availed himself of the "whistle-blower" protections under the Sarbanes-Oxley act, which allow for anonymous reporting of suspected wrongdoing. Had he not done that, he could have been implicated in the wrongdoing. As an aside, any electronic communication (emails, phone records, etc.) are now admissible as evidence. If he has emails stating what he suspected (or even if he does not, the company could be subpoenaed to produce them and their network data could be investigated to find anything that was deleted), those would serve to exonerate him from blame.
Answered by Mel