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Financial Crisis

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To: Management Team

From: The Crisis Team

Date: July 20, 2013

Subject: Financial Crisis

Robert Special, the company's Chief Financial Officer suddenly has resigned because there are speculations against him regarding inappropriate use of accounting practices. The U.S. Securities and Exchange Commission (SEC) is investigating the issue at hand and our company's accounting practices. Based on the documents they have requested, the SEC believes the issue concerns revenue recognition. Along with this memo to management is a press release that should agree with what the company expects to be released to the public.

As a publicly traded company, we are required to issue a notice to the press regarding any change in the company that may affect the company's stock. Our company is also legally required to disclose whether the company has adopted a code of ethics that applies to the CFO. If our company has not adopted an ethics code we must disclose this fact to the public and also explain why we have not done so. Our code of ethics should be made available to the public. It should be in the language that would allow other readers to understand that it is possible to base difficult ethical judgments on the values inherent in the code, instead of just based on the letter of the laws, rules, and regulations. The SEC requires by law that we make available to the public the financial condition of the company and any financial statements that may have gone through the audit process by a certified public accountant.

Rumors are beginning to circulate that suggest inappropriate behavior on the part of our company. In this type of situation, it is very important that we report to the public any financial changes that may be made to the company and try to let the public know our company's financial position. The company wants to make sure that in this type of situation we remain calm and try to provide to the public as little information as possible but enough information to appear involved in the public's eye. As a company, we need to make sure that any information that is material to the company's financial status needs to be disclosed to the public in some form. We need to make sure that all communication from our company is consistent and honest. Although it may hurt the company, we should try to cooperate fully with the media. The one thing that could potentially hurt our company in the public's eye is to avoid communication with the media.

Our company must take into consideration that anything that is released to the media may harm public opinion of the company. We must be truthful at all times and follow the regulations of the SEC. If it is determined that our company is at fault for providing misleading information regarding our financial



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