Whistleblower Hotlines: Phone, Web-Based, and E-mail

By: Matt Gardiner, CPA CFE

Whistleblower hotlines are the most effective way to enable staff, customers, and vendors to report fraud and unethical activities occurring at your organization. Historically, this has meant maintaining an actual telephone line where whistleblowers could call in tips, however over the last few years these hotlines have evolved to include web-based and e-mail reporting. These reporting methods are easily implemented, affordable, and can ensure the right personnel receive tips promptly.

According to the Association of Certified Fraud Examiners 2022 Report to the Nations, organizations with whistleblower hotlines detect fraud schemes in two-thirds the time, reducing the damage done by half compared to organizations which did not have hotlines. A clear majority of frauds are detected due to tips, which account for 42% of detected frauds. As one of the cheapest and most effective detection methods, it’s critical that all organizations have a hotline in place, whether it is a phone line, a web-based form, or an e-mail address for whistleblowers to send tips to.

To further strengthen your organization’s control environment, it’s important to implement an anti-fraud or ethics policy which all employees are required to sign, and to require training on the policy and topic on an ongoing basis. This ensures your employees are aware of the reporting lines they should follow, and serves as a deterrent by demonstrating that your organization is taking steps to improve controls and actively combat fraud.

While external audits are a strong deterrent against fraud, they only account for 4% of frauds detected. We recommend employing a reporting method for tips to be directed to the Board of Directors, a designated Internal Audit department, or an employee group which has been entrusted with the role of overseeing this function. Tips should be reviewed immediately and considered for investigation regularly.

Have questions about hotlines, anti-fraud or ethics policies for your organization? Feel free to reach out to us any time.