Big4Guy

Fraudulent financial reporting, misapprpriation of assets and other forms of fraud occur since there is a perceived opportunity to commit and conceal such activities. Management of an organization in today's times needs to take a proactive approach to curb such frauds. Properly implemented anitfraud programs can act as a deterrent to fraud risks. A critical piece of an effective antifraud programs is a whistleblower hotline. I could find two reasons why whistleblower hotlines are so important:

1. Whistleblower hotlines are required under Section 301 of the Sarbanes Oxley act.
2. According to a study by the Association of Certified Fraud Examiners, whistleblower hotlines uncover more verifiable cases of fraud than any other method.

So how can company's develop an effective whistleblower hotline. I was having a chat with one of my colleagues in our Fraud and Risk Assessment division. His advise on implementing whistleblower hotlines made a lot of sense to me. Here is what he had to say.

- An effective whistleblower hotline should be anonymous and continously available.
- Management should lay down a procedure on how to handle reports on suspected fraud received.
- Employees should be trained and encouraged to use whistleblower hotlines.
- Promote whistleblower hotlines. This can be done thorugh posters, intranet sites, workshops, cards, short films etc.

Related Posts on Fraud

Common Forms of Fraud - Part I
Common Forms of Fraud - Part II
Sarbanes Oxley Internal Controls Testing