KPMG introduces 'Ethics Hotline'
KPMG Ford Rhodes, Thornton and Co.'s Forensic Advisory practice
recently announced the launch of a confidential hotline with the signing
of its first client in Sri Lanka. The feature known as an "Ethics
Hotline" promotes the concept of good corporate governance, transparency
and ethical conduct which could benefit local companies, said KPMG in
Sri Lanka Partner and Forensic and Internal Audit Head Jagath Perera.
"The main benefit of the ethics hotline is that it provides a direct and
confidential channel which enables employees and even external
stakeholders to report corporate fraud or any unethical practices to an
independent third party which would then investigate or report to the
very top levels of management within the company", he added.
The toll free hotline enables whistle blowers to raise genuine
concerns about possible fraudulent or improper conduct in confidence,
allowing their organization to take prompt and effective action. The
Ethics Hotline is intended to uncover unethical behaviour among staff
and managers and to reduce fraud related costs.
Employees within companies sometimes suspect that fraudulent activity
is going on but are often reluctant to report or `blow the whistle' due
to lack of confidence in internal reporting systems, or fear of
victimisation or retribution. "Employers should do all they can to
remove these obstacles, and a whistle blowing hotline is one element of
the solution. Statistics from KPMG's India Fraud Survey in 2010 suggest
that approximately 50% of frauds are discovered following an employee
reporting the concern or an anonymous call often abbreviated as blowing
the whistle", Perera said. A hotline not only helps avoid employees
turning a blind eye to suspicions of unlawful activity, but also reduces
the risk of them going outside the organization with their concerns,
potentially causing unnecessary financial and reputational damage.
The 2010 ACFE Report to the Nation outlined that "Where an Ethics
Hotline was in place, the average duration of a fraud scheme was reduced
by 7 months and the median loss was reduced by 59%". |