Getting The Most out of Your Tip-Offs Anonymous Investment

Sometime in 2005 I had occasion to visit one of the big mines in Zimbabwe. A few kilometres from the mine, I gave a lift to two guys who worked there. Naturally we got to talking. I let them know I was a Forensic Auditor. When I explained what we do as Forensic Auditors, their reaction was “oh, just about time”. They shared with me some dirty goings-on at the mine. Knowing that the mine was part of a huge group serviced by Deloittes’ Tip-Offs Anonymous (TOA), I asked why they didn’t get to using it. Long story short, they were very cynical about the service and about reporting in general.

Yet, TOA is a marvelous reporting mechanism and is a great investment for any organization. Managed well, it is a potent weapon in an organisation’s anti-fraud arsenal. TAO functions well when it is part of an active anti-fraud policy framework, which I talk about here. TAO and a Fraud Contingency Plan are two pillars of an active anti-fraud policy framework.

Nevertheless, it has been my experience over the years that, within many organisations, the return on this investment is minuscule. The main cause, as my two mine friends exhibited, is skepticism. And the major cause of this skepticism is what employees view as management’s inactivity, or false action, when matters are reported.

Discretion during internal investigations means that only one or two executives need know of the progress of the work. Most of the staff may not even know of the investigation at all. When it is inconclusive, the investigation is likely to remain unknown. This sends negative signals to the whistleblowers and their confidants who may wrongly conclude that management do sweep fraud and other wrongdoing under the carpet and that reporting is therefore a waste of time. Some organizations try to manage this risk by maintaining a public log of issues reported, action taken and the results.

The best motivation for whistleblowing, though, is a successful and conclusive investigation. This requires experienced, skillful Investigators/Forensic Auditors. The resultant hearings, dismissals and Court trials speak louder than any logs or bulletins.

In conclusion, need I mention that inaction following a report of wrongdoing is the best way to create cynicism about the seriousness of an organization’s ethics policy?

© Caleb Mutsumba

What do you think? What strategies do you, or your company, use to manage the risk of fraud and error in your organisation? Are you primarily proactive or reactive in your approach to risk management? Share your experience in the Comment box below.

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