As described in Ethical Advocate blog post “Ethics Hotline Investigations Planning,” a report to a fraud or ethics hotline is often the first indication of potential wrongdoing. When a company has received a report of a potential unethical or fraudulent act, it is responsible to take appropriate action.
A good investigation begins when investigators carefully prepare a preliminary investigation plan and ensure they understand the legal implications of obtaining, reviewing, and using potential evidence. To that end, it is always wise to consult with internal or external counsel when planning and conducting an investigation.
The goal of any investigation is to be thorough and impartial, to gather facts, to retain evidence, to document findings, to draw viable conclusions, and, ultimately, to take appropriate actions.
The process is iterative. As evidence is gathered and as personnel are identified, new evidence will present itself along with the names of additional people to interview and additional sources to review. Continue following the process until there are no more leads.
Following are some general guidelines:
- Stay flexible. It is not unusual for the scope or direction of an investigation to change as new leads are uncovered. Follow up on all lines of inquiry.
- Be alert to employee rights; comply with relevant policies, practices, and laws.
- Gather as much information as possible. It will be used to prove or disprove an allegation and may be crucial in future legal proceedings.
- Interview all relevant individuals, to include all potential custodians of relevant information (print and electronic documents, email and voicemail messages, text messages, and telephone records). It is a best practice to use two interviewers, a questioner and a note taker.
- Begin with interviews of less senior employees or those who are distant from the alleged wrongdoing. Information gathered from these early interviews will be helpful in refining the approach to those who may have been involved in the alleged wrongdoing.
- Record the interviews if permitted by local law and appropriate for the situation, but also document mental impressions and make note of all details, no matter how seemingly insignificant at the time.
- Collect, secure, and preserve all evidence, in compliance with relevant policies, practices, and laws. In addition to securing computer data, email files, or other electronic data, consider whether or not to have interviewees sign the interview notes.
- Document the factual findings in a comprehensive report. Include a description of the alleged violation, a description of the investigation process, a list of witnesses interviewed and documents reviewed, and copies of interview notes and key documents.
- State your conclusions and make recommendations, as supported by the facts.
- Review “lessons learned” as an opportunity to update internal controls and compliance and training programs.
When an organization responds to an initial ethics hotline report with an impartial and appropriately thorough investigation, and takes suitable actions for substantiated allegations, it reinforces trust in the hotline process and support for an ethical culture. As always, this information should not be used in place of legal counsel, which is critical in ensuring compliance.