RE: Audit Hotline

[Kaplan, Jim]

Title: Audit Hotline

I think that this is an important topic and perhaps others would be willing to help with your survey. I also would like to explore the possibility of establishing a fraud hotline and would welcome comments from others on the best approach to selling this to management. If anyone has a proposal they would be willing to share it may be beneficial to many of our audit peers.   Here is some information I found that may be helpful:   Here is a paragraph from a report from the Australian Institute of Criminology Hotlines Organizations whose managers wish to have fraud reported must make it easier for employees to do so. One obvious vehicle is the hotline. This exists to receive confidential disclosure of irregularities via telephone, and may be available on a 24 hour basis, during normal business hours, or periodically, as is the case with operation NOAH, the drug disclosure program sponsored by Australian police agencies. Hotline complaints are screened, and those with apparent foundation are selected for further investigation. The manner in which hotlines are established and publicized can effect their utility. The very existence of a hotline can be a reminder to personnel that there is an organizational commitment to fraud control. On the other hand, hotlines are vulnerable to abuse by frivolous or vexatious complainants. In addition, as a means of fraud detection, they may be lacking in both efficiency and effectiveness. Many complaints may be trivial, if not groundless; significant cases of fraud, waste and abuse tend to come to official attention by other means. Hotlines may thus be an inefficient means of detecting fraud. Their very existence, however, may serve an important educative and deterrent function.   You might also want to check out the following: The report includes a section titled International Best Practice: Guidelines for Establishing Effective Hotlines http://www.psc.gov.za/docs/reports/2002/hotlines/01.pdf   and also: Study of the Benefits of the Office of Legislative Audits Establishing a Fraud Hotline http://www.ola.state.md.us/reportfiles/performance/2002/FraudHot.pdf        -----Original Message----- From: Md Azmani Syah Mohamad Ali [mailto:[EMAIL PROTECTED]] Sent: Tuesday, December 31, 2002 8:28 PM To: Kaplan, Jim Subject: RE: Audit Hotline Hi Jim,   What I have in mind is setting up a hotline in which all matters concerning Fraud, bureaucracy, Misuse of authority and company assets, etc. I am yet to finalize the poll on Audit Hotline at my workplace (as attached). The only thing is that I have to write up a proposal in which it could convince the management on the needs on having a hotline.   Thanks Jim!   -----Original Message----- From: Kaplan, Jim [mailto:[EMAIL PROTECTED]] Sent: Tuesday, December 31, 2002 9:52 PM To: Md Azmani Syah Mohamad Ali; [EMAIL PROTECTED]; [EMAIL PROTECTED] Subject: RE: Audit Hotline   By audit hotline I assume that you mean a fraud hotline for your organization. There are many links on the Internet for fraud hotlines.   Some companies use a subscriber service while others maintain an internal hotline. Check out some of the following for guidance:   http://www.ethicsline.com/   http://www.city.toronto.on.ca/audit/2002/fraud_hotline_six_month_pilot_project_final_nov6_02.pdf   http://www.comptroller.co.orange.fl.us/audit/audfrud.htm   http://www.utexas.edu/admin/audit/fraud.html   From cpaonline.com.au Hotline If a telephone hotline is to be installed, it is important that consideration be given to the immediate effect on staff relations. In our experience, it is always best to explain the hotline as being in the best interests of the company and the staff on the basis that fraud leads to losses which can lead to cut-backs and redundancies. It is equally important that the hotline be run professionally. A dedicated hotline number should be set up in internal audit, or preferably, the offices of a properly vetted external agency. The telephone number should be displayed on posters in prominent places in the work area such as canteens and rest rooms. As and when information is received, it is important that it is acted upon promptly and efficiently. As in all potential fraud situations, the subject of any allegation should not be alerted and should be allowed to carry on in their post as normal until an investigation has either exonerated them or gathered sufficient evidence/information to allow further action.      -----Original Message----- From: Md Azmani Syah Mohamad Ali [mailto:[EMAIL PROTECTED]] Sent: Monday, December 30, 2002 9:34 PM To: '[EMAIL PROTECTED]'; [EMAIL PROTECTED] Subject: Audit Hotline   Good day to all Auditors. I am writing up a proposal on the above matter for my organization. I am hoping that if fellow auditors could shed me some light on what to be written as a proposal. Thank you, Happy New Year!