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Four Benefits of Having A Hotline or Complaint Intake Vehicle for Effective Operations


This is the second month addressing the issue of Hotlines.  Last month I wrote a blog entitled “Have We Adequately Prepared Our Hotline Operators and Intake Workers?”  The genesis for this writing is the amount of questions and discussions I have engaged in the last several months that raise concerns about preparation, planning, and deployment of hotline operations.  We have great expectations for these units, but have we built them on a firm and fast foundation?  In many cases not. (https://www.linkedin.com/pulse/have-we-adequately-prepared-our-hotline-operators-intake-anderson/)

We ramp them up because we know we should have them, it looks good to have them, we think they are a miracle cure, but without sound planning and deployment, they will surely not meet expectations or operate optimally.  Last month the intent was to consider the lack of training that we provide to employees assigned to these positions.  This month we will examine operational considerations.

Clear and Convincing Benefits of Establishing a Fraud Hotline

You should know that tips are by far the most common means of initial investigation, audit, ethics, and fraud issues.   According to the Association of Certified Fraud Examiners’ (ACFE) 2018 Report to the Nations internal audits were the initial fraud detection method just 15 percent of the time, but tips were the source for 40 percent of the cases reported. In this report, the ACFE found that organizations that have a fraud hotline in place experienced losses that were 50 percent smaller than those that did not have a hotline. Additionally, and even more dramatic, the duration of the fraud was cut in half when a hotline was in place. The empirical data supports the cost effectiveness of fraud hotlines without a doubt and minimizing the time the fraud operates is priceless.  

However, to maximize the true benefits of any hotline, it requires more than a call center that is staffed around the clock. Web-based reporting, email, mail, and even faxed reporting mechanisms are also not enough, although essential.  Hotlines must also have in place qualified and trained employees to support all operations but even that is not enough to ensure that the potential benefits of a hotline are fully realized. In fact, no hotline could be optimally successful without the full support of management and, ideally, an independent committee of subject matter experts to provide oversight and accountability.  We must approach the hotline’s existence holistically.

This has not been done effectively in most cases.  The hotline, although a standalone unit, must be inextricably connected to investigative functions, audit units, those responsible for internal controls, as well as, designated ethics officials.  We should be completing continual analysis of complaints and information being passed to the hotline.  How does that information intersect with previous complaints, are we seeing repeating patterns, do we see internal control deficiencies?  The analysis and questions we should be asking about this unsolicited intelligence is diverse.  Some will be responded to reactively via investigation or audit, but much can be assessed proactively to improve the organizations health prior to events and resolve systemic issues.

This analysis also requires communication and coordination between functional units. We must overcome our differences in operational language (i.e. auditor and investigators) and focus in on organizational mission and objectives.  This approach will ensure that issues are dealt with focusing on long term resolution and not repetitively dealing with the same things over and over.

A committee that oversees a hotline program must have the full support of management. A key part of a hotline’s success are meetings with senior management to refer new cases that require investigation, review the formal resolutions provided by departments, and discuss prior practices related to difficult and unusual cases. The authority of the committee helps ensure that hotline investigations are completed in a timely fashion. If there are questions raised by the resolutions, or deviations from best practices, the committee can request an updated resolution from the department. In some cases, the committee may decide that additional investigation is necessary to holistically deal with all aspects of the matter.

The additional benefit is to ensure participating elements have knowledge of what is being done and each entities responsibility for resolution.  In the hotline arena, this occurs far less than it should.  Segregated functions result in segregated results.  The complaint is forwarded on and hotline personnel have no idea what happens.  By closing the loop on this cycle, we ensure that all members know the direction and emphasis of the organization regarding issues.  How often do functional units go back to hotline personnel to seek information and input from them?  Bringing in those that give you the best chance of maximizing results, auditors, technical experts, hotline operators, etc. can allow you to fully resolve the hard and soft issues surrounding a complaint more effectively and completely.

HOLDING EMPLOYEES ACCOUNTABLE

In addition to the well-known benefits of hotlines globally, another benefit of the hotline is the improved perception of accountability within the organization. We need to promote and publicize the existence of the hotline and results generated because of it.   This publicity serves two purposes: it reminds employees and the public about the existence of the hotline as a reporting resource, and it reassures whistleblowers that their concerns will be investigated.

Whenever hotline investigations are substantiated, employees must be held accountable through formal recommendations, actions, and announcements.  Additionally, when indicated, substantiated investigations must be referred to prosecutors or decision makers to prosecute or discipline any inappropriate actions. 

HOLDING MANAGEMENT ACCOUNTABLE

Another benefit is that investigations that result from tips to hotlines help to hold management accountable for improving internal controls through formal recommendations that are made and tracked using the same process used for performance audits. This focus on internal controls and best practices serves to improve overall operations and the overall health of the organization. 

Recommendations can be very diverse, ranging from updating existing internal controls policies, to improving contract oversight and accountability. These recommendations, and the formal follow-up process, ensure that management is publicly accountable for taking corrective action to address issues that were identified as part of hotline inquiries. Completing this in an open and timely fashion helps to ensure that timelines for implementation are either met or justified through additional explanation. 

ACCOUNTABILITY TO WHISTLEBLOWERS 

Yet another benefit of a hotline is that it provides accountability to whistleblowers. It’s important to consider the risks that whistleblowers take by coming forward with their concerns and suspicions. The ACFE report notes that while most tips are reported by identified employees, 14 percent of fraud cases are reported anonymously. Experience suggests that the primary reason whistleblowers choose to remain anonymous is their fear of retaliation. Those employees, and other individuals who identify themselves, also have a keen interest in ensuring that their identity will be protected and remain confidential. In many cases, laws prohibit the public disclosure of both the subject employees and the individuals who submit complaints.

While protecting all people necessary, hotline activity reports should reflect the status of all cases during the period that were closed, open and unresolved, or referred to appropriate responders for action. Reports like these provide a mechanism to communicate the results of investigations to whistleblowers and other concerned parties, and they confirm that cases are being actively investigated or handled. Providing this accountability to whistleblowers ensures that the risk they took to report the suspected wrongdoing was not in vain.These reports also benefit the hotline program by demonstrating as much transparency to the public and employees as legally possible. 

HOLDING THE HOTLINE ACCOUNTABLE

Committee oversight regarding the timeliness of resolutions, priority of cases, resource needs, and even the quality of hotline reports and recommendations helps to hold hotline activities accountable to oversight expectations.  This action not only assures efficient resolutions to cases, but also highlights the value of the organization’s actions themselves.

LESSONS LEARNED: A HOTLINE PROGRAM REDUCES THE RISK OF FRAUD, WASTE, AND ABUSE

Based on the statistics presented by the ACFE and the results repeatedly observed from those operating hotlines, many organizations are likely to be victimized by fraud, waste, and abuse in one form or another. Establishing a robust hotline program is a very important element of improving organization climate in the areas of fraud, waste, and abuse, as well as, the ethical climate. The hotline will help to identify significant fraud, prosecute and terminate the perpetrators involved, and strengthen internal controls. Some of the key components of a successful hotline program are: 

  1. Open the hotline to employees, vendors, and citizens to anonymously report suspected fraud, waste, abuse, and ethical malfeasance via a variety of portals.
  2. Clearly publicize the hotline by issuing public reports on substantiated cases and notifying all employees that a hotline is available through posters, emails, and presentations at new-employee orientation sessions and ethics briefings. The knowledge of its existence and actions in itself, serves as a deterrent.
  3. When fraud, waste, or abuse is identified, determine the root causes that allowed it to occur, and strengthen controls to mitigate the risk that would allow it to happen again. 
  4. Ensure that less serious allegations are referred to departments to investigate and take appropriate corrective action when necessary. Fact-finding investigations conducted by departments often will result in the strengthening of internal controls as well.  Maintain a system to track these inquiries and the results.

So, what does your analysis of your hotline/intake section show?

Is it holistically integrated within the operations of your organization?

Do some of the items addressed here need to be implemented with your section?

Are you maximizing the operational capacity of your hotline/intake unit?

So, the questions I have for you as the reader: (and for which I really want your input)

  1. Do you agree with the premise expressed here regarding these functions, their impact and organization? 
  2. What other areas need to be addressed to maximize hotline capabilities? 
  3. What other operational issues need to be addressed to advocate change?
  4. Any other issue you would like to comment on?

As a result of all the recent discussions on hotline/intake operations that I have been involved in, I’m developing two courses to address this clear need.  The first would focus on training to adequately address the needs of the hotline/intake worker and the second would address operational considerations and integration into organization operations.  I would be interested in any input you have on these objectives.

Anderson Investigative Associates is positioned to custom tailor interview training to your specific needs.  If you have any questions, or would like to discuss training, please reach out to me.  If you have suggestions for future blogs, let me know.  Additional issues pertaining to interviewing and investigations can be found in other blogs that I have written and are contained in most blocks of instruction that our company presents. 

If you have additional questions or comments, don’t hesitate to reach out to me at:

Please be well, and stay safe out there,

Mark A. Anderson

Director of Training and Development

Anderson Investigative Associates, llc

128 Oarsman Xing

St. Marys, GA 31558

manderson@andersoninvestigative.com

tel:912-882-5857 tel:912-571-6686

www.AndersonInvestigative.com

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Questions?
(912) 882-5857