Make tip-offs part of the culture
AN AMOUNT OF almost US$3 trillion of companies’ revenue is lost worldwide each year due to fraud. A panel of experts at the Fraud & Corruption Africa Summit 2011 reported instances of company fraud are most likely to be detected by tip-offs rather than other means. So tip-off hotlines are a good idea. But like most good ideas, the application can often go awry.
Nicholas John, CEO of Deloitte Tip-Offs Anonymous, says the most common mistake companies make when implementing a fraud hotline is they fail to identify a specific objective. “A tip-off hotline shouldn’t be a catch-all fraud-fighting mechanism,” says John. One of the most important ways that a company’s culture can be improved is by encouraging employees to report suspicious activity without fear of punishment, which can only be accomplished through ensuring anonymity and confidentiality.
The hotline can also act as a deterrent to fraudulent behaviour or even make up a part of the company’s risk management framework by improving organisational controls: management can use tip-offs to determine the weakest links in the company’s structure. “
Companies implementing hotlines just for the sake of improving their ratings are likely to struggle to propagate the fraudfighting culture throughout the company, resulting in a lack of management support and distrust by employees – known as the “big brother is watching us syndrome”.