Internal Control/Anti-Fraud Program Design for the Small Business: A Guide for Companies NOT Subject to the Sarbanes-Oxley Act

APPENDIX B The Fraud Reporting Policy

SAMPLE FRAUD REPORTING POLICY ¹

Policy Statement

As referenced in the fraud policy of {Company Name}, the {responsible parties} have established this policy to provide a framework for reporting suspicions of fraud. {Company Name} commits to properly addressing the concerns of employees as submitted in accordance with the provisions of this policy.

Scope

It is understood that employees, directors, vendors, and other outside agencies may report suspicions of fraud under this policy. It is also understood that the scope of this policy can include reporting suspicions of fraudulent activity allegedly performed by employees, directors, vendors, or other outside agencies against the organization.

Reportable Actions Constituting Fraud

The terms fraud, misappropriation, and irregularities are synonymous terms commonly used to refer to occupational or internal fraud. There are three types of fraud: asset misappropriation (the taking of company assets), corruption (collusion between at least two parties to gain personally while causing a loss to the company), and financial statement fraud (misrepresenting the financial position and/or results of operations).

Fraud can include, but is not limited to, any dishonest act, misapplication of funds or assets, profiting on insider knowledge, destruction of records or assets, disclosure of confidential ...