Letters

Takes Issue With Report Cited
It is more than disappointing the JofA chose to publish unsubstantiated allegations made against ExxonMobil in a study by Claros Consulting (“Is Disregard for the Environment Bad Business?” JofA, Jan.03, page 55), especially without seeking our comment or response. At the very least this does not represent balanced journalism.
Let me set the record straight. Having studied the report closely, we’ve been unable to understand the basis of the author’s assignment of the parameters in the economic model. They appear to be arbitrary and subjective, with a target end result in mind. Furthermore, the conclusions drawn are not based on fact, and the study itself was not peer-reviewed.

Climate change is an important issue to us and one we take very seriously. We completely disagree with the study’s conclusion that our approach to climate change is diminishing shareholder value. On the contrary, ExxonMobil is committed to increasing long-term shareholder value, and we lead the industry in this area. We believe it is in our shareholders’ best interests to develop and supply energy sources that benefit society and minimize environmental impact. ExxonMobil has been an industry leader in bringing many environmental improvements to our business and consumer products. This includes taking a constructive approach to the issue of climate change.

While studies must continue to better understand the potential risks of climate change and possible consequences, we continue to take concrete actions that make a real difference—for example, reducing emissions through the expansion and use of cogeneration facilities as well as conserving energy in our refineries and plants, resulting in 37% more efficiency than 25 years ago. We also are collaborating with auto manufacturers on developing fuel cell technology.

We strongly believe that research and new technology will provide the most effective long-term solution to address the potential risk of climate change. That’s why we are investing substantial dollars in this area, as demonstrated by our recent $100 million commitment to the Stanford University Global Climate and Energy Project (G-CEP). An unprecedented research collaboration between the scientific and engineering community and global companies, G-CEP is dedicated to researching commercially viable technologies that can substantially reduce greenhouse gas emissions.

Our concern for the environment and efficient use of energy is an integral part of our daily business operations, which we think is in the best interest of all our shareholders.

Patrick T. Mulva
Vice-President, Investor Relations, and Secretary
Exxon Mobil Corporation
Irving, Texas

JofA Taken to Task
Has the editor lost all sense of professionalism? The title of the article, “Make ’Em Pay Up” (JofA, Oct.02, page 67), smacks of the style used by the New York Post or a London tabloid.

Shame on the JofA; more shame on our profession.

David Lichtenthal, CPA
New York City

Auditor Should Resign
“The Padding That Hurts” (JofA, Feb.03, page 67) was an excellent discussion of the reactions of various parties to fraud. However, I believe an independent auditor should resign from the audit of any company such as the one described. The external auditor knew a major officer was dishonest but not to what extent. He knew the CEO was not alarmed at the executive’s dishonesty and had even threatened to replace the auditor for bringing a fraud to his attention. The auditor also knew most of the members of the audit committee “were chagrined that they had to involve themselves in what they saw as such an insignificant matter.”

In my opinion the article should have discussed the possibility of the external auditor’s resigning and also mentioned that any audit committee members who react as did those described in the article need to be better informed of their responsibilities.

John A. Jeter, CPA
Omaha, Nebraska

More About Payroll Fraud
I read with interest “Keep Ghosts Off the Payroll” (JofA, Dec.02, page 77) and would like to share what our firm discovered a number of years ago while conducting some basic auditing procedures for a local business.

The payroll clerk in this particular company was a very patient man. His job was preparing all aspects of the payroll—he calculated hours worked and taxes withheld, generated checks and prepared payroll tax deposits and reports. The only duty he was not responsible for was the actual signing of the checks, which the owner did.

The clerk realized the owner was concerned only with the net check issued and never required a report indicating gross wages. That is when the young man set the wheels in motion to embezzle from his employer. At that point, he had been employed by the company approximately five years. During the next three years, he grossed up his check by several thousand dollars per pay period. Then he adjusted his federal withholding and social security deductions upward to generate the net check he always had received.

By properly completing his W-2 with the exaggerated wages received, he protected himself from any possible IRS liability for underreporting wages. He filed his tax returns and received extremely large refunds.

As in most fraud cases what started out on a small scale escalated as the embezzler built up confidence. Fortunately for our client, we discovered the ongoing thievery and reported it to management.

Even though the employee stole in excess of $100,000, management chose not to prosecute but terminated his employment immediately. Since then, it has set up safeguards to keep this type of problem from happening in the future.

Too much control by one employee can be a very dangerous thing.

Joy S. Wood, CPA
Clarksdale, Mississippi