FROM THE RESOURCE GUIDE
Are fraud reporting hotlines worth it? Yes, according to the ACFE’s Report to the Nations, a biennial global study on occupational fraud. For more than a decade, the ACFE’s Report to the Nations has measured the effect of hotlines on generating tips about occupational fraud, and the data has consistently shown that frauds are more likely to be detected by tip when a hotline is in place. While 46% of cases in the report were detected by tip at organizations with a hotline, only 30% of cases were detected by tip in organizations without a hotline.
Leadership should care about cultivating tips because doing so allows the organization to take steps to stop the fraud and mitigate the losses. At organizations without hotlines, frauds were more than twice as likely to be discovered by accident, and over three times more likely to be discovered by external audit. The upshot is that, according to the report, frauds detected by tip tend to be discovered more quickly and cause less damage than those detected by accident or external audit. By implementing and promoting a hotline, organizations are both gaining an investigative resource and improving the bottom line.
Just because you build it, though, doesn’t mean they will come. Setting up a hotline is only the first step in ensuring your company receives the information it needs to prevent and detect fraud. ACFE Regent Ryan Hubbs, CFE, CIA, CCEP, CCSA, and Global Anticorruption and Fraud Manager at Schlumberger, spoke about the challenges hotlines face at last year’s ACFE Global Fraud Conference. He offered up these suggestions to build trust in your hotline program:
- Training and awareness. An organization should continually strive to help employees know how the hotline-reporting program works, why the organization believes in it, who operates it and why it's a critical part of the compliance culture. Organizations should include frequently asked questions (FAQs) and answers regarding the hotline in all employee new-hire and supervisor training.
- Ongoing communication and accessibility. Communication about a hotline-reporting program, recent compliance issues and messages from management should be routine and commonplace. Information on a hotline program and how to report a concern should be within one click of the organization's intranet or external website. An organization should communicate program information in as many languages as necessary to provide coverage.
- Transparency. Prominently display your organization's hotline-reporting and investigation process, including the expertise and contact information of your trained investigators, what employees should expect, plus the organization's responsibilities to cooperate and protect against retaliation.
- Proficiency and objectivity. Those who manage the hotline and investigation processes should be technically proficient, professional, well trained and experienced in handling reporting of concerns. The organization should also install adequate systems, processes and technologies to support the investigators and, ultimately, the employees.
- Assessment. Ongoing assessments should include analyses of how employees view the program, independent reviews conducted by internal audit or external professionals and disclosure of all complaints and resolutions with external auditors.
Hubbs suggested that companies should build and model a repetitive habit. If one person calls a hotline and experiences the ideal scenario of reporting a concern or irregularity, then that will become habit, and others will follow suit. The herd will actually lead the way for a positive habit, a habit that could stop fraud in its tracks. You can find out even more about hotlines in the ACFE’s 2018 Report to the Nations on Occupational Fraud and Abuse, coming out soon. Visit ACFE.com/RTTN for the latest updates.
Find even more resources, courses, events and books in the ACFE's latest Resource Guide.