By AMBER ENGELBRECHT, Published in Employment Law - Feature

As organisations face added financial pressures in the wake of the recent global economic downturn, stakeholders need to remain vigilant in their plight against fraud and corruption.


Fraud detection is critical because the speed at which it is detected can have a significant impact on the ultimate size of the fraud. It should thus be increasingly important to those organisations that wish to succeed in a post-COVID world.

The 2020 Report to the Nations global study by the ACFE (Association of Certified Fraud Examiners) claims that the premise for effectively detecting occupational fraud lies in identifying which methods are best at facilitating detection. Regardless of the leading-edge detection techniques available to organisations today, the ACFE found that tips were still the most common detection method by a wide margin. In fact, 40% of the cases in their most recent study were detected by way of tips. Tips were found to be almost three times more effective in fraud detection than internal audit, which they cited as being the next best method. The ACFE found that those organisations with whistle-blowing hotlines were more often able to detect fraud via tips than those without.

In South Africa, the King IV Report on Corporate Governance for South Africa focuses on ethical leadership, ethical culture and ethical responsibility. This report makes special provision for the introduction of safe reporting mechanisms in a bid to further encourage stakeholders to maintain and monitor organisational ethics. Whistle-blowing hotlines have proven to be one of the more convenient, cost effective and most widely chosen safe-reporting mechanisms for organisations; they have become an essential component of any corporate fraud risk management strategy. What better way to encourage stakeholders to report fraud and misconduct within an organisation than to provide them with an easily accessible tool that facilitates anonymous reporting, 24 hours a day, to an independent service provider? Such a mechanism not only assists in fraud detection, but also encourages ethical culture and ethical responsibility within the workplace.

So how does one go about sourcing a reputable whistle-blowing hotline provider? This is an important question as the wrong provider may cause irrevocable reputational damage to the organisation and whistle-blower alike. There are a few key aspects to consider when appointing an external hotline service provider:

  • Failover (a backup operational mode) and redundancy: Service providers should have adequate delivery hubs for failover and disaster recovery. Ideally one needs a primary, secondary and virtual hub to ensure uninterrupted service levels during times of uncertainty. Adequate redundancy is critical to ensure uninterrupted service continuity 24/7/365. This, together with data privacy credentials, should be requested and carefully scrutinised before appointing an external service provider. Ideally, service providers should conceal the physical location of these hubs, to safeguard anonymity and ensure utmost confidentiality.
  • Agent headcount and experience: Service providers should have a core team of multi-skilled agents with adequate forensic hotline experience and minimal staff turnover. These elements support service consistency and speak to the confidentiality, commitment and integrity of the team. Team tenure, experience and qualifications should be requested and scrutinised before appointing an external service provider. Agents often only have one chance at soliciting information from whistle-blowers. Accuracy and experience are thus critical. From a customer service perspective, it is imperative for agents to be skilled in the art of respectfully eliciting the maximum information from whistle-blowers, as this creates high quality reports and a positive call experience which may encourage repeat usage.
  • Independence and anonymity: Service providers should be independent from the organisation and facilitate anonymous and confidential reporting. Experienced service providers usually incorporate a confidential feedback loop into the scope of service provided. Having a truly independent and anonymous service provides some assurance to potential whistle-blowers and may contribute toward repeat usage.
  • Reporting mediums: Service providers should support a host of anonymous and confidential reporting mediums, including phone, fax, email, web, post and mobile app. Again, data privacy credentials are of utmost importance and should be requested and scrutinised before appointing an external service provider.
  • Coverage: Service providers should operate 24 hours a day, 365 days a year so whistle-blowers can make reports immediately, before they lose courage or face threats. Experienced service providers usually operate live 24 hours a day. They do not use answering machines as this may violate the anonymity and confidentiality elements.
  • Additional forensic support: Service providers should be able to provide additional forensic support such as triaging and investigations. Such capabilities allow reports to be assessed by forensic professionals who can effectively identify the nature of the allegations reported and escalate/investigate these reports according to urgency and severity.
  • Language capabilities: Service providers should be able to speak to whistle-blowers in their preferred language. Third-party interpreters or translation services should be approached with caution due to actual and perceived confidentiality concerns. Experienced service providers are usually able to provide reports in English as well as the language spoken by the whistle-blower. This is done to preserve the content and context of the allegation and to ensure that nothing is lost in translation.
  • Longevity and experience: Service providers should be well established, with a proven track record and contactable client references. Local and global experience is often required and preferable. Experienced service providers should be willing and able to share key metrics around their average time to answer, abandonment percentages, number of calls per annum, caller service ratings, etc.

Ethics and compliance officers and other executives cannot be everywhere at once. Effectively uncovering, addressing, and rooting out unethical behaviours requires empowering stakeholders with the right tools and processes to speak up when they see something is amiss. Gaining employee trust means issues are reported to a reputable service provider, not on social media, and handled appropriately. When stakeholders can contribute to the integrity of the company without fear of retaliation, they invest in the company mission with increased performance and loyalty. This is something we should all encourage if we are to survive in the "new normal".

Engelbrecht leads the KPMG FairCall Centre of Excellence, which operates 24/7/365 from an undisclosed location in South Africa, with various forensic hubs worldwide. Operated by forensic professionals, KPMG FairCall is a proven, confidential and anonymous way for all organisational stakeholders to report suspected fraud and misconduct. KPMG FairCall has an extensive global footprint and currently operates in more than 60 countries worldwide. KPMG FairCall offers whistle-blowers support in 35 languages via combined phone and web intake, and facilitates further reporting via email, post, fax and mobile app.