Commentary of an accounting ethical dilemma

One of Tom's tax clients, a small dental practice, e-mailed him to introduce its new office manager, Jane Smith. As Tom reads the email, he realizes that he knows Jane Smith. Several years back, Jane was the office manager of another medical group for almost five years, using her position to embezzle nearly $60,000. She occasionally had one of the doctor sign blank checks, which she would then make payable to her creditors, including her credit card accounts, utility companies, and others that mirrored her employer's. She would also sometimes forge a doctor's signature. At first, Jane stole small amounts in each month, and then the amounts increased as she did it more. Jane got fired when her embezzlement was discovered. Jane was a single mother caring for a special needs child, and out of sympathy, the doctors agreed to accept small monthly payments in restitution and forgo legal proceedings. Tom became the accountant for the medical group after Jane got fired. One of the doctors there had mentioned about this incident. Although the doctor didn't say that Tom needs to keep it as secret, Tom feels like the medical group doesn't want the third party to know about the embezzlement. The former office manager of the dental practice retired, she was in charge of almost every financial affairs, including preparing checks for signatures, making entries on day sheets and taking deposits to the bank. If the dentist expects Jane to fill that same role, he may be assuming risks greater than he realizes. Comment and analyze with the aspect of professional disengagement.      

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