Most organisations today are faced with the increasing threat of internal fraud in the workplace. Employee the costs businesses across the globe billions each year.
The financial losses fail to reflect the full picture of course. Business owners who suffer internal fraud often find it is the damage to their organisations reputation that is the most harmful.
The vast majority of people working in businesses are honest and dedicated to their employer. Nonetheless a recent report states that the cost of fraud in Scotland alone may exceed £3billion this year. Just as concerning is the fact that 85% of fraud is estimated to be perpetrated by dishonest staC.
Early detection of fraud is crucial to minimise financial loss and reputational damage. One increasingly important tool to combat the threat of internal fraud and to provide early detection of fraud is a whistleblowing service for employees. Whistleblowing mitigates the risk of fraud within organisations and provides invaluable protection of finances and reputation.
Whilst most organisations have dedicated whistleblowing hotlines they need to ask themselves if they are they doing enough to ensure that these arrangements are fit-for-purpose?
A 'tick in the box' reflecting that a whistleblowing service is in place will satisfy many business owners and the deafening silence through those lines may not cause concern. Of course, rare use of organisations whistleblowing hotlines may actually reflect the robust and highly secure controls and processes within an organisation. No news is good news after all ... or is it really?
The Public Interest Disclosure Act 1998 in the UK and Sarbanes Oxley legislation in the USA was introduced to encourage staff to report fraud and offer protection against reprisals. However, more often than not illegal, corrupt and unethical practices go undetected because employees still fear the consequences of reporting through internal channels.
In order to ensure whistleblowing services are fit-for-purpose businesses should follow the steps below.
1. Whistleblowing and fraud policies must be communicated to all staC in the workplace reflecting zero tolerance approach.
2. Policies must be endorsed by business owners.
3. Staff should be given regular fraud awareness training at least once a year highlighting types of fraud and threats to the business. Awareness should include how to report fraud and what legal and other protection staff are given.
4. All employees should sign and understand their code of conduct outlining the disciplinary action that could be taken against fraud offenders.
5. Staff should have the means to report through independent external whistleblowing hotlines to encourage speaking up.
6. Regular tests of whistleblowing lines should be conducted to ensure that they are working.
Transparency and effective communication are vital to the implementation of effective whistleblowing services. Without it, businesses will continue to remain vulnerable.
The increasing threat of internal fraud is a significant risk for all businesses. Employers should ensure that their whistleblowing hotline is more than just a tick box.