Tips received through anonymous reporting mechanisms such as ethics and compliance hotlines, or helplines as they are sometimes called, remain the most likely method for detecting fraud, according the Association of Certified Fraud Examiners. Effective hotline systems demonstrate many of the following features:

1.        Serve as both a source of information and a place to report problems

2.        Operate as part of a broader ethics and compliance process and program

3.        Are promoted via comprehensive and regularly scheduled communications efforts

4.        Are guided by formal helpline or hotline protocols

5.        Operate as a single system – one place to contact, or

6.        Route all reports to a central clearinghouse, if multiple systems exist

7.        Offer both the reality and caller perception of anonymity and appropriate confidentiality

8.        Are toll free

9.        Provide access to native language speakers or to a translator

10.        Offer interactivity with trained, skilled interviewers/operators

11.        Provide 24/7 coverage with prompt response

12.        Are available to vendors, suppliers, and/or customers

13.        Provide robust reporting features

14.        Route reports to an internal department or function with requisite independence, knowledge, authority, and objectivity to investigate promptly and appropriately

15.        Recognize the value of the data for an overall assessment of organizational culture and issues

16.        Communicate sanitized outcomes to employees

17.        Periodically monitor the status of whistleblowers, when known, to determine if they are experiencing harassment or retaliation, and

18.        Are also available via the internet, fax, and mail

Well-run hotlines are highly effective at detecting fraud and can reduce the amount of time it takes to detect wrongful behavior after it occurs.  They also can empower employees and relevant third parties to address ethical issues, and by doing so, can also deter wrongdoing. In addition, well-run ethics hotline systems provide value beyond their core purpose to detect and deter fraud and ethics violations. They can also provide valuable insight into organizational culture and help identify general issues and concerns that may be bubbling just below the surface, enabling organizations to respond in a timely manner.

It’s a new year, and a good time to review and assess your organization’s anonymous hotline and related ethics and compliance processes. Ethical Advocate provides confidential and anonymous ethics hotlines and related services. We would be happy to discuss these services in more detail.