Wednesday, 21 December 2016 15:07

The best whistleblowing and anti-fraud solution

As a counter-fraud investigator of many years, nothing surprises me when it comes to the various types of devious behaviour perpetrated by fraudsters against businesses up and down the country.

Most frauds that are committed against businesses share common characteristics such as weak governance and poor financial controls. Countless frauds occur against all types of businesses where the perpetrators are often trusted employees.

Just ask the Charity Commission, whose new figures reflect that one third of frauds committed against charities were carried out by charity staff, trustees and volunteers. One unnamed charity lost more than £1million in the largest single reported loss in 2015/16. The commission’s new website “charities against fraud” showed that 178 fraud incidents took place. An analysis undertaken by the commission found that poor financial controls compounded by placing excessive trust in key charity personnel combined to expose the charities to fraud and abuse.

Small businesses, like many charities, usually have a considerably lower level of anti-fraud controls than larger businesses. They also usually have a lack of staff who can investigate fraud effectively or those who can offer the best advice in how to protect their business against fraud. This disparity in fraud prevention, detection and fraud knowledge leaves smaller businesses vulnerable to fraud which inevitably causes significant financial loss to their limited budgets as well as irreparable damage to their reputations.


One solution for businesses is to introduce clear whistleblowing policies and procedures to encourage staff to report fraud. This is reflected this year in the Association of Certified Fraud Examiners (ACFE) “Report to the Nations” which advised that the most common detection method was fraud that was reported by the staff themselves. However, most crucially it is those businesses that had whistleblowing hotlines which were much more likely to detect fraud through their staff than businesses without hotlines.

Interestingly, the ACFE report also advised that in cases detected by staff in businesses with formal fraud reporting mechanisms, telephone hotlines were the most commonly used method. However, staff submitting concerns via email and web-based or online forms combined to make reporting more common through the internet than by telephone.

Most importantly, to prevent fraud recurring, each fraud should be fully investigated and the inherent root cause of the fraud accurately determined by qualified and experienced fraud specialists. Once the root cause of fraud is determined by a fraud specialist then preventative measures should be immediately introduced to ensure that the same types of frauds do not occur again.

Independent and external whistleblowing service providers that can offer both telephone and online reporting solutions for their staff will provide their businesses with additional protection against the threat of fraud. However, whistleblowing providers who combine this service with anti-fraud specialists who can undertake fraud examinations to identify root cause of fraud, will provide businesses with the protection that they need and deserve.

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