Building An Effective Whistleblower Program

Most management teams are aware of the potential risks and costs that bad actors committing fraud can create. This may include significant financial loss, reputational harm, operational risks, and even indirect financial loss. Not to mention the internal upheaval an incident can create during the investigation, evidence gathering, and resolution process. It can take several months before the incident is addressed and bad actors are removed and punished. To prevent this from happening many organizations invest in fraud protection programs.

According to the Occupational Fraud 2022: Report to the Nations, tips are one of the most common ways that fraud is identified. This data point reflects the importance of implementing a whistleblower program as part of fraud prevention efforts. Yet many questions often arise about how to effectively manage a hotline. The ACFE recently released  Building a Best in Class Whistleblower Hotline Program, which provides important benchmarking and best practice information. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.

How Does Your Hotline Measure Up?

• Oversight of Hotline Program – It is not enough to simply have a hotline, but it must be properly managed which requires oversight. The study wanted to understand the business units most assigned this task. It was determined that in 42% of companies it is assigned to internal audit, 36% to the audit committee, and 36% to the compliance department. Proper oversight ensures the organization will receive the greatest value from the program.
• Hotline Effectiveness – The study also wanted to investigate whether the presence of a formal fraud department impacted hotline effectiveness. It was discovered among organizations with highly rated programs that 53% have a fraud department while 35% do not. It was also found that only 29% of fraud departments assigned a team to assist with program oversight.
• Reporting Options – Most provide multiple options to report suspicious or illegal behavior. It was determined that 77% offer a dedicated hotline number, 72% website reporting option, 60% dedicated email address, and 40% have direct contact with a specific individual (i.e., phone number or office location). It was also found that 91% of programs can receive an anonymous report.
• Whistleblower Retaliation – Ensuring there is little chance for retaliation is essential if a program is going to be effective. Yet it appears that many organizations have not prioritized this need. It was found that only 44% of companies train managers on how to avoid, recognize, and respond to potential retaliation against whistleblowers.
• Formal Audits – Reviewing the performance of the hotline program is important to ensure the maximum value is provided. The study wanted to understand the number of programs that regularly undergo a formal audit. It was discovered that only 39% of these programs undergo an audit.

Contact Us

It’s clear that Atlanta organizations should offer a whistleblower hotline for employees, customers, and vendors to report suspicious activity. Concurrently, ongoing optimization of the program is necessary to ensure optimal performance. If you have questions about the information outlined above or need assistance with a fraud concern, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.