Report Says Employee Education Critical in Effective Fraud Reporting

February 12, 2003

A new article just released by The Network, Inc., a provider of employee hotline services, and The Association of Certified Fraud Examiners, reports it’s not enough to tell your employees to report things such as “accounting irregularities” or “fraudulent action.”
Companies have to really educate their employees about what constitutes fraud and how to report these incidents.

The report, titled “10 Tips for Preventing Corporate Fraud” states that
“having a confidential 24/7 hotline operated by a third party is your best option for uncovering fraud.” The hotlines, however, reportedly will not be of service if employees do not have a vast amount of education on how to properly use them.

The Sarbanes-Oxley Act of 2002 aims to protect investors from fraud. The law has a lot of requirements, including providing a clear-cut procedure to allow employees to report fraud anonymously.

Another critical preventative step is establishing regular fraud detection procedures.

In addition to instituting a hotline, educating employees about fraud,
and establishing fraud detection procedures, the following round out the 10 tips:

* Have oversight of fraud risk by a senior member of management and the board of directors
* Have certified fraud examiners on staff
* Involve suppliers in your fraud detection efforts
* Take all tips seriously and investigate all tips
* Decide who will be notified about tips, including audit committee
* Conduct background checks on all potential employees
* Set an ethical tone from the top

The complete article “Ten Tips for Preventing Corporate Fraud” is
available free to companies by visiting

Was this article valuable?

Here are more articles you may enjoy.