National Whistleblower Day will be celebrated this year on July 30. If it has been a while since your firm last reviewed its whistleblower policy, now might be an appropriate time to do so.

Jim Quaid, CPA, of Chicago-based accounting firm Ostrow Reisin Berk & Abrams (ORBA), offers eight tips on writing or revising a whistleblower policy. Whistleblower policies, he says, are important to ensuring “tips” [reports of ethical concerns] are received by the organization (Quaid, 2017).

Quaid directed his eight whistleblower policy suggestions at not-for-profit organizations, but they can apply to any type of firm. He says:

1. Be clear about whom the policy covers. Spell out who is covered by your policy. In addition to employees, volunteers, and board members, you might want to include clients and third parties that conduct business with your organization, such as vendors and independent contractors.
2. State which types of wrongdoing are covered. Financial misdeeds often get the most attention; however, whistleblower policies can have a longer reach. For example, you might include violations of your organization’s client protection policies, donor policies, conflicts of interest, and unsafe work conditions.
3. Spell out reporting procedures. Explain the procedures for reporting concerns. Must claims be made to a compliance officer or can they be reported anonymously? Is a confidential hotline available? To whom can whistleblowers turn if the designated individual is suspected of wrongdoing? Your procedures should be clear and simple enough to encourage individuals to come forward.
4. Describe investigative procedures. State that every credible concern raised by a whistleblower will be promptly and thoroughly investigated and that designated investigators will have adequate independence to conduct an objective query. Ideally, investigators should report directly to your organization’s board of directors.
5. Describe post-investigation steps. Let everyone know what will happen after the investigation is complete. For instance, will the reporting individual receive feedback? Will the individual responsible for the illegal or unethical behavior be punished? If your organization opts not to take corrective action, be sure to document your reasoning.
6. Promise confidentiality. A guarantee of confidentiality can make whistleblowing more appealing. However, it may not be possible to make such promises if whistleblowers need to become witnesses in criminal or civil proceedings. However, your policy should assure confidentiality to the greatest extent possible.
7. Describe disciplinary action. Not every whistleblower is motivated by pure intentions. State that your organization will take disciplinary action against individuals who make unfounded allegations that are reckless, malicious, or intentionally false.
8. Forbid retaliation. A critical component of a whistleblower policy is the prohibition against retaliation. Make clear that no retaliation—including harassment, termination, or blacklisting—will be tolerated against anyone who raises concerns about potentially illegal or otherwise wrongful practices in good faith. “Good faith” means the individual has a reasonable belief that a problem exists. Specify the party to whom complaints of retaliation can be addressed. Violators should be disciplined promptly and appropriately.

Policies and procedures may go into more detail and should be tailored appropriately for each firm, as Quaid acknowledges. But his eight suggestions cover the essentials.

Hotlines are a common means for employees and others to confidentially and anonymously report concerns about suspected unethical or illegal behavior. They are especially well-received when they are staffed and managed by independent external organizations, which also offer data reporting and other related assistance to small and large firms.

Ethical Advocate provides comprehensive ethics and compliance solutions, including ethics and compliance training and confidential and anonymous hotlines. Please contact us for additional information.

References

Quaid, Jim. “Eight Tips for Writing, or Revising, a Whistleblower Policy.” ORBA blog, April 21, 2017. http://www.orbablog.com/blog/not-for-profit/eight-tips-for-writing-or-revising-a-whistleblower-policy/