An effective whistleblower policy is a key defense against fraud and abuse of resources. The audit committee can play a significant role in establishing and monitoring this policy.
The first step in establishing a strong policy is to develop a culture in which employees view the reporting of questionable practices and actions as a contributing factor to an environment of integrity. The audit committee can play an important role in assuring all employees are encouraged to report suspected violations of internal policies or external laws.
To be effective, the reporting process must incorporate features that ensure confidentiality of those reporting their concerns. The audit committee must also ensure all employees are confident they will be protected from retaliation.
A sound whistleblower policy contains components such as the following:
Other matters to consider include:
The importance of establishing a strong whistleblower policy cannot be over-emphasized. Of equal importance, however, is the knowledge such a process exists. It is imperative that employees recognize that their concerns are being communicated and that appropriate investigative steps will be taken to resolve them. While developing your policy, consider having all employees annually sign a statement stating that they are aware of the policy and are following established protocols.
Eide Bailly’s Nonprofit team works closely with our Fraud & Forensic Advisory team to assist nonprofits in reviewing existing policies and evaluating the strength of internal controls. In addition, we have established an online anonymous hotline service that can be utilized by our clients. Please contact any member of your Eide Bailly service team to discuss how we can be of assistance.
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