Whistleblower hotlines provide individuals and organizations with processes for reporting and dealing with ethical issues. People may assume that the existence of a hotline means the report and response processes are adequate. But are they?

In Ethics and the Internal Auditor’s Political Dilemma: Tools and Techniques (2016), author Lynn Fountain advises internal auditors, board members, and others to probe that assumption by asking pertinent questions.

For example, does your organization have a well-documented and well-outlined protocol for managing reported ethical issues? What procedures are utilized when dealing with ethical reports, and, if asked, would auditors, managers, board members, and others be able to name them? Do those same people know who within the organization receives the complaints and how those complaints, or other reports, are vetted and evaluated?

Fountain reminds us that hotlines must be properly managed, monitored, and reported, and that all issues must be investigated by experienced individuals who understand the various concepts of ethical behavior. Organizations need to ensure that!

Most whistleblowers, she says, call a hotline because they have an intrinsic belief the observed behavior or actions were truly wrong. Their calls need to be taken seriously. So, are calls received through the hotline taken seriously or are they viewed by management as an administrative nuisance? Fountain identifies some related questions:

• Would employees be able to relay positive outcomes of the hotline?
• If you are in a role where you participate in the compilation of hotline results, are the calls of the nature that reflect the true purpose of the hotline?
• How long does it take management to investigate or react to an issue?
• Are issues always resolved with no concerns? If so, do you have any concerns about how issues are investigated?
• Who decides an issue has been completely and thoroughly investigated? Is there a protocol for investigation?

Issues raised through the whistleblower hotline should be reported to the board. But what is the process? How are the issues reported? Fountain asks:

• Does the board simply receive statistics of calls, or are members informed of the substance of the issues?
• Does the board ask difficult questions of management about reported issues?
• Does the board have input into the investigation process?

She advises members of the board to ask:

• What information is provided regarding the content and resolution of calls coming through the hotline?
• How does the company classify complaints? Is there some measurement regarding whether an issue is high, moderate, or low risk?
• Are you aware of the facts behind more significant complaints?
• Are you satisfied with the investigative techniques? If not, why not?

Answers to the preceding questions can help auditors and others to assess how management and the board view whistleblower hotlines and engage with reported issues, as well as to assess existing hotline processes and protocols.

Whistleblower hotlines should be viewed as one part of an overall organizational approach to promoting an ethical culture and encouraging employees and others to speak up when they observe wrongdoing. But they certainly are essential tools for surfacing fraudulent behavior, ethical lapses, or other issues of concern. Organizations and their boards will help ensure their hotlines are as effective as possible by periodically asking tough questions and making needed changes.

Ethical Advocate provides comprehensive ethics and compliance solutions, including ethics and compliance training and confidential and anonymous hotlines, meeting Sarbanes-Oxley (SOX), Federal Acquisition Regulation (FAR), and other regulatory and reporting needs.

References

Fountain, Lynn. Ethics and the Internal Auditor’s Political Dilemma: Tools and Techniques. Boca Raton, FL: CRC Press, 2016.