Wednesday, August 17, 2011

Providing Employees a Mechanism to Report Concerns

Yesterday we referred you to a free guide to reducing the risk of fraud co-published by the AICPA, IIA, and ACFE. Among the recommended strategies is a recommendation to provide employees a mechanism (or multiple mechanisms) to report concerns about fraud or other misconduct. The August 2011 edition of the Journal of Accountancy contains a number of strategies designed to provide employees with avenues of reporting their concerns. These strategies are summarized below but you can read the entire article here.

  • Deploy telephone hotlines
  • Establish a web-based reporting system
  • Implement workshops or focus groups
  • Conduct confidential and anonymous employee surveys
  • Solicit third-party interviews (customers, vendors, regulators, creditors, analysts, etc who come into routine contact with employees.
  • Keep in mind that auditing and monitoring in high-risk areas are important tools.
  • Require exit interviews
  • Enhance management accessibility by walking around
  • Create and publicize an open-door policy
  • Deputize "ethics champions"

These strategies would need to be tailored for the size of the organization and the assessed risk that fraud could occur. Additionally, some of these might prove impractical to implement at very small contractors. The key take-away here is to understand the importance of providing employees a confidential way to report concerns.

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