Before the novel coronavirus (COVID-19) pandemic struck, employees who suspected occupational fraud in their organizations had multiple options for notifying their employers. For example, they could use interoffice mail to send information anonymously or meet with HR personnel in person. Is now the time to install a fraud hotline for anonymous internal reporting?
Reporting options for employees working from home are more limited — particularly if they wish to remain anonymous. The current working environment only highlights the necessity for a fraud hotline or online portal that workers can access anywhere, anytime. If your business doesn’t already offer a confidential reporting mechanism, start thinking about how you can establish one.
Confidential fraud hotlines are one of the best ways to nab workplace criminals. The Association of Certified Fraud Examiners has determined that the average organization with a hotline discovers fraud within 12 months, versus 18 months for those without hotlines. Hotlines also limit losses — $98,000 less in losses for employers that offer them.
One of the reasons hotlines are important is because, in most cases, subordinates or coworkers know or suspect fraud long before owners or members of upper management do. Yet they may not say anything for fear of reprisal. Anonymity, therefore, is essential.
Establishing a hotline doesn’t have to be hard, but it does require some planning. Consider taking the following steps:
Identify an executive sponsor. Your hotline or portal will require a modest expenditure. If you aren’t the company’s owner or a financial decisionmaker, identify an executive sponsor to make the case for the investment.
Develop a project charter. A charter documents the business benefits of deploying a hotline or portal — for example, reducing financial losses and empowering employees.
Form a steering committee. In addition to executives and technology experts, include legal and HR representatives. They can help ensure that the processes you put in place don’t violate employee rights and applicable laws.
Review technology options. Determine your business’s needs and identify the vendors that can meet them. Learn which systems similar companies use or ask your financial and legal advisors for suggestions.
Up and running
Once you launch an anonymous reporting channel, make sure you position it so that all employees and other stakeholders can access it easily. If, for example, you company has overseas operations, work with local experts to overcome language, cultural and other barriers that might prevent workers from using a hotline.
And be sure to publicize your reporting mechanism at every appropriate opportunity. Executives might routinely mention it in all-company emails and in public speeches, and you should provide information (and links, if applicable) in your employee handbook and on your intranet. For help putting a fraud hotline for anonymous internal reporting, contact Ashley Sparks, CPA, CFE at email@example.com