Following the Enron/WorldCom incident, the US government passed legislation that mandates organizations to implement a “whistleblower system”: the Sarbanes-Oxley Act 2002. The section of text relevant to whistle blowing initiatives is contained in Sarbanes-Oxley Act 2002: SEC 301 (4) PUBLIC COMPANY AUDIT COMITTEES.
(4) COMPLAINTS –Each audit committee shall establish procedures for –
“(A) the receipt, retention, and treatment of complaints received by the issuer regarding accounting, internal accounting controls, or auditing matters; and
(B) the confidential, anonymous submission by employees of the issuer of concerns regarding questionable accounting or auditing matters.”
The measures outlined in the document mandates a system for employees to anonymously report any unethical activities, such as internal fraud, theft or questionable accounting practices. Employing the ConcernCheck confidential hotline helps organizations fully comply with this legislation.
Compliant Whistleblower Systems include:
- High availability and accessibility for every employee in your organization
- Complete accounts of any ‘whistleblower’ information reported
- Anonymity for hotline users
- Secure storage for reports
Failure to Comply
Any publicly traded company that has not complied with the Sarbanes-Oxley Act 2002: SEC 301 (4) will be prohibited from being listed on any US national securities exchanges or US national securities associations.
Often, companies who have complied with these regulations have received more lenient penalties if it was found that there were instances of internal fraud, theft or questionable accounting practices occurring. The existence of an avenue for employees to report unethical behavior provides the company with a safeguard, often reducing their culpability.
|
