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, theft, corruption and misconduct 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.

Survey participants estimated that the typical organization loses 5% of its revenues to fraud each year. Applied to the estimated 2011 Gross World Product, this figure translates to a potential projected global fraud loss of more than $3.5 trillion.

Whistleblowing (Tips) from employees, customers, vendors, and other sources remained the most common detection method (43.2% up from 40.2% in 2010), catching nearly three times as many frauds as any other form of detection. This is consistent with the findings of ACFE reports since 2002 . Tips remain by far and away the most common means of detection. Management review and internal audit were the second and third most common forms of detection, uncovering 16% and 13% of frauds.

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 2012 fraud survey found the average fraud / theft per organisation in Australia was $3.08 million with an 82% increase in individual frauds exceeding $1 million.  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.

On 28 June 2013, Federal Parliament passed legislation granting the Fair Work Commission (FWC) the power to deal with workplace bullying complaints, with the Fair Work Amendment Act No 73 2013 (Cth). The new anti-bullying laws will come into effect from 1 January 2014.

In essence a worker will be able to  lodge a claim of “repeated” bullying direct with the FWC without notifying his/her employer first.  The Commission will be able to make orders which may include the reporting of the matter to the relevant state or territory workplace health and safety regulator, but it cannot order financial compensation to a worker nor order reinstatement. Failure of an employer to comply with a Commission order could result in a financial penalty of up to $33000.

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.

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.