Important Facts About Whistle-Blower Hotlines

Posted on Wednesday, May 02, 2018

In recent years, many companies have implemented hotlines for employees, vendors and others to anonymously report workplace behavior that is unethical or illegal. These hotlines allow employees to confidentially come forward with important information without fear of retribution. Just by having one in place, you can reduce fraudulent incidents, according to a survey done by the Association of Certified Fraud Examiners.

Examples of Behavior Reported on Hotlines

Theft of inventory,
Payroll fraud,
Embezzlement,
Kickbacks,
Financial irregularities,
Harassment,
Unsafe working conditions,
Discrimination,
Destruction or falsification of records,
Drug use, and
Theft of trade secrets/ intellectual espionage.

But setting up an effective hotline involves more than putting in an additional phone line. Here are 14 important considerations that can make your hotline more successful. After all, once you set one up, you want people to use it.

1. Keep in mind that hotlines are not just for public companies. The Sarbanes Oxley Act (SOX) requires publicly traded companies to provide employees with a way to anonymously report financial issues. This requirement is often met by setting up a hotline. However, establishing a hotline can also benefit private companies, as well as not-for-profit organizations. Corrupt or "ethically bankrupt" employees do not take into account whether their company's shares are publicly traded before they engage in questionable conduct — and private companies should have a way for colleagues to report the behavior. 

2. Written, verbal — or both?Various methods can be employed to help whistleblowers report issues. These include a telephone hotline, an e-mail address and a dedicated Post Office box. (Email hotlines should incorporate the proper encryption to ensure confidentiality.) Some companies supplement their phone systems with e-mail options. Keep in mind that many whistleblowers perceive there is more anonymity with telephone hotlines. 

3. It's preferable to have strangers answer the calls. Ideally, a hotline should be operated by a third party, rather than in-house. This reaffirms the company's commitment to protecting whistleblowers' identities and encourages employees to report suspected unethical behavior. Your attorney can advise you on how to proceed in setting up an outsourced hotline.

4. Let callers follow up. Tipsters should be offered the ability to call back to check on the status of their tips. A call-back option also provides additional opportunities to question callers regarding the information they initially provided.

5. The hotline should be available 24 hours a day, 365 days a year. You cannot pick the time of day that tipsters will decide to share what they know. Often, they call outside of traditional work hours. A hotline should be made available 24/7. This is especially important if the hotline number is published globally.

6. Keep your workforce in mind. If many of your employees do not speak English as their first language, the hotline should have multilingual capabilities with reports that are interpreted for your company.

 

Posted in Fraud & Forensics Group

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.