Whistleblowing is an essential component of Fraud Detection and Bullying Harassment Minimisation Strategies
A truly independent whistleblower service giving your employees an opportunity to report fraud and theft early
Risks faced by business
A risk is a threat or potential disruption to your business and its profitability. Risks may come from poor recruitment, unreliable suppliers, health and safety incidents, fraud etc. If a “risk” eventuates, you have a problem. You will almost certainly lose revenue, you may experience a disruption to your operations, you’ll probably experience a decline in profit and you may have to go to court either as a witness or a defendant. Those who commit fraud often do so because they think no-one knows what is happening.
The 2012 Report to the Nation on Occupational Fraud and Abuse by the Association of Certified Fraud Examiners (ACFE) found typical organisations lose 5% of its annual revenue to fraud. Applied to the estimated 2011 Gross World Product, this figure translates to a potential total fraud loss of more than $3.5 trillion. The median loss caused by the occupational fraud cases in the ACFE study was $140,000. More than one-fifth of the frauds involved losses of at least $1 million. The frauds lasted a median of 18 months before being detected.
The ACFE recommended “providing individuals a means to report suspicious activity is a critical part of an anti-fraud program. Fraud reporting mechanisms, such as whistleblowing hotlines, should be set up to receive tips from both internal and external sources and should allow anonymity and confidentiality. Management should actively encourage employees to report suspicious activity, as well as enact and emphasize an anti-retaliation policy. ”
Whistleblowing reduces fraud and theft
Whistleblowing has helped reduce up to 50% of corporate fraud and theft in the United States. Australia is lagging behind in implementing independent, anonymous whistleblowing services, therefore we have not seen the same reduction in these risks.
An Australian/New Zealand 2010 fraud survey found the average fraud / theft per organisation in Australia rose to $3 million up from $1.5 million in 2008 and the average number of frauds increased to 813 up from 530 in 2008. Employees behaving badly have caused severe monetary losses and significant disruption to business.
Whistleblowing detects and minimises the impact of bullying and harassment
Employers have a duty of care to provide a safe working environment for their employees. The definition of safety extends to emotional and psychological safety. Companies that use whistleblowing services find they learn of bullying and harassment behaviours earlier and can act to stamp them out faster before the behaviours become out of control. Naturally this is of great benefit to the victims but also provides business owners with comfort as it limits their exposure to legal and reputational risks including potentially hefty OHS fines and now even significant prison sentences.
Section 21A offence of Stalking in the Crimes Act 1958 (Vic) now makes bullying a criminal offence in Victoria. The purpose of this legislative change is to address the issue of serious bullying and deter people from engaging in the use of abusive or offensive words to or in the presence of the victim, and acting in a way that could reasonably be expected to cause physical or mental harm to the victim, including self-harm or arouse apprehension or fear in the victim for his or her own safety or that of another. Employers must take responsibility to ensure that employees can work in a safe environment that is free from these types of risks. Click here
What is holding Australia back?
There are a number of reasons why Australia hasn’t reduced fraud and theft to the same extent as the USA. Following the spectacular collapses of Enron and Worldcom The Sarbanes Oxley legislation in the USA requires organisations to have an “Independent Whistleblowing Service” yet despite our own examples of malfeasance (think HIH, Storm Financial, ABC Learning Centres, Clive Peeters etc) it is not yet mandatory in Australia.
In addition Australians tend to cling to an outdated notion of “not dobbing on your mates”. But when your so called “mates” could be jeopardising your very livelihood and putting the company and its investors at extreme financial risk this is clearly misguided.
Secure Online Whistleblowing
Most employees have access to the internet and making a secure online report has many advantages compared to simply the telephone, email or post. The employee making the report can remain anonymous if they choose. A private online feedback forum can be used to help clarify the information being provided. An encrypted, secure independent reporting system available 24/7 means your staff can provide the knowledge you need to manage risks as soon as they become aware of any threat or risk to your business. It is about options and designing a whistleblower program which best suits your organisation’s culture and people whether that be by our Web based Solution alone or with our PLUS option of telephone.