The Sarbanes-Oxley Act requires publicly traded companies to provide a confidential way for employees to report fraudulent and wrongful behavior. Although it is a requirement, we still recommended that all organizations implement some sort of anonymous hotline reporting for any wrongdoing.
The Association of Certified Fraud Examiners 2014 Report to the Nations states that tips were the most common detection method for organizations with and without hotlines, but the benefit was much more pronounced in organizations with them.
- Reduce the possibility of inappropriate or illegal company actions
- Confidential way for employees to present issues to management and lessens the potential for retaliation
- Increase the likelihood of early detection
- Allows for more information to be provided than other communication methods
- Having adequate controls that seek out fraud, rather than relying on external or passive detection methods, can dramatically reduce the cost and duration of schemes