Setting Up Your Company’s Fraud Hotline

You’ve probably heard that confidential hotlines are one of the best ways to ferret out occupational fraud. After all, when employees steal, their colleagues (as well as customers and vendors) are more likely to be aware of it than are managers in the executive suite. At the same time, those in the know may be reluctant to “rat out” fellow workers. Confidential fraud hotlines employees can access outside of work make the decision to report much easier.

But how do you actually set up a hotline and ensure that it’s effective?

Easy steps

The first step is to meet with your legal advisor and members of your human resources and operations teams. Address any concerns they might have and secure their support before proceeding. It’s important to establish which department will fund the hotline and which individuals will investigate leads, work with law enforcement (if necessary) and communicate outcomes to stakeholders.

Next, select a hotline provider. Although some businesses manage their hotline internally, outsourcing the job provides certain advantages. Extracting useful information from reluctant callers generally is best handled by experienced operators. Using a third party can also help reassure tipsters of confidentiality. Most hotline providers offer secure online portals that make it easy for your company to manage and analyze tips submitted via the hotline.

When you’re ready to launch, make sure to strike the right tone. Explain to employees that this tool will help protect your company from financial losses and other negative outcomes such as bad publicity and poor morale that can affect everyone in the organization. Be sure to stress that the hotline isn’t to be used to report noncriminal activity, such as personality conflicts or disagreements. And explain how your company and the hotline provider are committed to protecting anonymity, to the extent it’s possible.

Raise awareness

Sometimes all it takes to stop fraud is a phone call — or even the possibility of one. Simply having a hotline can deter would-be fraudsters because of the increased risk that their actions would be reported. To ensure employees know about your hotline’s existence, post information in common spaces and have managers mention it whenever appropriate. Contact us for more information.

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DISCLAIMER: This blog is provided for informational purposes only and is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant. Presentation of the information in this article does not create nor constitute an accountant-client relationship. While we use reasonable efforts to furnish accurate and up-to-date information, the evolving landscape surrounding these topics is supported by regulations or guidance that are subject to change.

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