Executive Roadmap to Fraud Prevention and Internal Control: Creating a Culture of Compliance, 2nd Edition

CHAPTER 12

Whistleblowers and Hotlines

EXECUTIVE SUMMARY

Whistleblowers and hotlines are important elements in the detection and prevention of fraud and corruption. The Federal Sentencing Guidelines, Sarbanes-Oxley, the Dodd-Frank Act, and other corporate governance enhancements all discuss the importance of whistleblowers and hotlines, as well as the standards to implement them. Tips from employees are the most common means of fraud detection, and a hotline is the reporting mechanism of choice. Creating a state-of-the-art reporting system and properly communicating its existence allows employees and others to report violations of business conduct and other issues. In addition, legitimate whistleblowers, who have evidence of fraud, must be confident that they will be protected from retaliation in reporting allegations. Failure to build this protection into a program will guarantee civil and criminal repercussions. Numerous requirements in setting up a successful hotline must be understood and carried out in protecting a company. One major requirement is the use of a third-party provider for the hotline to ensure independence and confidentiality.

WHAT ARE WHISTLEBLOWERS?

Now may be the best time to be a whistleblower. There are more whistleblower statutes and more protections than ever before. The potential for huge payouts has extended beyond just qui tam cases and the huge monetary rewards are helping overcome the stigma of being an informant. The Dodd-Frank Act's Whistleblower ...