Give Employees A Voice To Report Fraud

KPM Fraud Update link to blog.

04 May Give Employees A Voice To Report Fraud

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 in person with human resources (HR) personnel.

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 does not already offer a confidential reporting mechanism, start thinking about how you can establish one.

Limiting Damage

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.

Getting Started

Establishing a hotline does not 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 are not 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 does not violate employee rights and applicable laws.

Review technology options. Determine your business’ 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 & 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.

In addition, 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 hotline or portal in place, contact us.