Three current studies from PricewaterhouseCooper (PWC), Ethics Resource Center (ERC), and Association of Certified Fraud Examiners (ACFE) have found that whistleblowers are significant resource to find and prevent fraud and misconduct.
Download PWC, 2007, "Economic Crime: People, culture and Control."
In the PWC Report,
"Effectively implemented whistle-blowing systems - and a corporate culture that supports them - have had a noticeable impact, detecting fraud in 8% of cases, almost three times the effect they had in 2005. Moreover, if a whistle-blowing system was rated as 'effective' by the company surveyed, it almost doubled the rate of detection (to 14%)" (p. 10).
"In certain regions, such as North America, a whistle-blowing system is not statutory requirement of a listed company and has become a fixture of the company culture. Indeed, our study shows that management, by propagating the right ethical tone within its business and trading practices, can make a substantial impact on levels of fraud detection, in some cases reducing the chance of the detection of fraud 'by accident' to as low as 20% of cases" (p. 10-11).
The Impact of whistle-blowing systems & Whistle-blowing programmes:best practice tips (p. 23).
Download ACFE, 2008, "2008 Report To The Nation On Occupational Fraud & Abuse."
In the ACFE Report,
"In comparing detection methods based on the victim's organization type, we see that, with a few exceptions, the relative frequency of initial detection methods is generally consistent across the four categories of organizations. In each category, tips were the most common detection method, generally followed by internal controls and internal audits" (p. 22).
"The fact that tips continue to be the most effective means of detecting fraud suggests that ogranizations could improve their detection efforts by establishing formal structures to receive reports about possible fraudulent conduct" (p. 23).
"By far, the greatest percentage of tips came from employees of the victim organization, which is consistent with our findings in 2006. The fact that over half of all fraud detection tips came from employees suggests that organization should focus on employee education as a key component of their fraud detection strategies. Employees should be trained to understand what constitutes fraud and how it harms the organization. They should be encouraged to report illegal or suspicious behavior, and they should be reassured that reports may be made confidentially and that the ogranization prohibits retaliation against whistleblwers" (p. 23).
Download Ethics Resource Center, 2007, "The_National_Government_Ethics_Survey."
In the ERC Report,
"Whistleblower hotlines have received a great deal of legislative and regulatory attention, however, they are the reporting method of choice less than 1 percent of the time for observations of the following kinds of misconduct: Abusive or intimidating behavior; putting one's own interests ahead of the organization's; Alternation of documents,..." (p. 7).
"Many reporters are retaliated against. More than one in six (17%) employees who reported the misconduct they observed experienced retaliation as a result" (p. 9).
"Only 8 percent of government workplaces have strong ethical cultures" (p. 12)
"Focus on Tone at the "Tops." A sizable percentage of government employees believe that their top management is weak on ethics. However, when asked to identify the "top" of their organization, more government employees chose the leader of their particular work locations than the senior-most leader of their organization as a whole. This means that there are many "tops" to government organizations, and all leaders need to be trained and encouraged to create strong ethical cultures. In particular, employees need to be convinced that their management doesn't just "talk the talk": the commitments leaders make - especially when they talk about the importance of ethics and support for whistleblowers - need to be followed with action" (p. 39).
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