Secure your fraud zone defense

Congratulations! You have a fraud hotline, but now what? It’s useless without investigation and communication. The author outlines his experiences creating a fraud mitigation program for his multibillion-dollar company.

The ethics hotline of the company I work for, which provides home automation and security systems, annually receives more than 100 allegations of fraud. However, prior to 2014, no one adequately investigated actionable information, and no one investigating the allegations communicated with other departments. The lack of communication became obvious during an investigation in which we identified more than seven hotline calls going back two years that, if we’d properly investigated, could’ve led to the early discovery of an asset misappropriation scheme.

The inaction cost our company more than $100,000. Had we properly investigated the first allegation the loss to the scheme might have been only $7,000. Employee morale in this location deteriorated because the reporting employees became increasingly despondent and ultimately threatened to go to local media if the company didn’t do something.

We knew things had to change.

Change, but how?

I’d previously worked for an international forensic accounting firm and had several progressive roles in various internal audit departments. In my prior internal audit roles, I’d conduct internal investigations only when the need arose. Then in July 2014, I assumed the role of forensic auditor with my current employer in which I’d investigate fraud schemes daily. Naturally, I was excited by the opportunity.