5 Tips for Setting Up an Effective Whistleblower Hotline

5 Tips for Setting Up an Effective Whistleblower Hotline

Whistleblowers are often depicted as controversial figures (as evidenced by the media’s portrayal of Edward Snowden) and some even go as far as to call them traitors. In the workplace however, these groups of individuals should be hailed as heroes, as they are key in preventing internal fraud from occurring and are a huge asset to their company. 

In fact, 49% of serious misconduct is reported by a colleague

Therefore, companies should endeavour to create a safe and effective means for whistleblowers to call out this serious misconduct. This blog will outline (number) tips for setting up a whistleblower hotline that employees will feel comfortable using, and that management can easily create investigation reports with. 

1) Consider Whether An Internal or External Whistleblower Hotline is Appropriate

The first decision any company needs to make regarding their whistleblower hotline is whether it should be run internally or externally. Should it be operated within the company or subcontracted to an external source? Both options have its benefits and downsides, which management must consider before they can start investigating internal fraud reports.

An internal hotline is often run by the company’s HR or internal audit department. The advantages of this strategy are that it eliminates the need for a middle man, so the company can speak directly with the whistleblower and get all the details directly from the source. It also prevents information leaks that could damage the company’s reputation, since all reports are kept within the company. However, conducting the hotline in-house will involve many considerations, such as budget, resources, implementation, training and policies among others. 

On the other hand, an external hotline is developed, implemented and operated by a third party, and avoids many of these considerations. They often offer a 24/7 multilingual service, with quick response times and employees may feel safer knowing they are talking to an independent third party. The downside is that there is some risk some of this information may be leaked to the public since it is not under the direct control of the company. 

2) Have Different Communication Channels

If your company does decide to set up an internal whistleblower hotline, you must then consider how your whistleblowers will communicate to management. Although the term “hotline” implies that employees can only report internal fraud via the phone, whistleblower hotlines can contain a variety of communication channels that will help management become aware of potential concerns. 

In today’s world, there are so many different ways to connect with others, without even speaking to them. Social media has completely changed the way we interact with one another. For the more tech-savvy younger generations, it is rare for them to pick up the phone and talk to someone, unless it is a close friend or family member. In the context of whistleblowing, it is important that companies create a reporting channel that employees are comfortable with using.

Younger employees may feel anxious about making a phone call to report internal fraud. There are many factors that can induce fear and prevent employees from picking up the phone, which can include:

  • Fear of revealing their identity
  • The serious nature of the phone call
  • A hesitation to pick up the phone
  • They are speaking to someone they don’t know

Furthermore, the quality of the investigation report will be highly dependent on the training and skill of the person on the other side of the line. Hence, it is vital that companies implement different communication channels besides a phone-based hotline. 

Companies should include an online platform with a web-based form as part of their whistleblower hotline, which employees can fill in and report any internal fraud that they see. Not only will this allow for easy categorisation of complaints, it will also give the employee the piece of mind that they can express themselves without being put on the spot. 

As alluded to above, there is also no third party who may get the details of the report incorrect, so the company can work directly with the whistleblower. Additionally, an online platform can include an anonymous chat function that the case manager can use to build trust with the employee and ask further questions if necessary. 

For employees who do not wish to remain anonymous, another whistleblower communication channel that companies should include is in-person reporting. Often the chance to speak directly to another person about the matter will help the whistleblower come forward with their information. The main benefit for the company is that they can easily follow up with the employee throughout their investigation for more information or to update them on the status of their investigation. 

 

3) Implement a Case Management System

One critical component of any whistleblower hotline is a case management system to complement it. Once a report has been made, a company must swiftly investigate the issue, determine the appropriate course of action, then implement it within the company. This is where Polonious can help. 

Polonious’ ISO27001 certified security ensures your evidence and case files are stored securely. Our detailed security configuration will also ensure that you can keep whistleblowers fully anonymous, or known only to an external or internal whistleblower team, depending on the level of anonymity requested. We can then help generate an investigation report for you at the click of a button.

Polonious’ configurable workflows ensure a fair, consistent, and compliant process for all internal investigations.

4) Know What Metrics You Are Using

Your company should now have an efficient system of collecting whistleblower reports and investigating them in a timely manner. The next step is the measurement of certain metrics, which allows companies to gain insights into their hotline and make informed decisions to optimise the process over time. Some of the most essential metrics are discussed below.

Cases Over Time

A fundamental metric that any whistleblower hotline should include is cases over time. Although it is a common belief that the less cases of whistleblowing the better, managers should actually be concerned if they receive no reports. It is unrealistic to believe that absolutely no internal fraud is occurring within a company, and whistleblowers are central to uncovering this internal fraud. 

More cases being reported may indicate that the program is working and employees feel comfortable using the communication channel. If there is a downward trend in cases, this may point to employees not embracing a culture of compliance. 

Displaying cases reported over time in a graph will also allow the case manager to easily discern if there is seasonality in cases, or if certain events trigger employees to report cases. 

Cases by Department

Another key measurement is where in the business the cases are being reported from. If a specific department is reporting more cases than others, this may be a signal that there is poor training or a culture of corruption within the department. Management can therefore be agile and make adjustments to the department. 

Cases by Channel

By measuring where cases are sourced, a company will have a better understanding of which channels employees prefer when reporting internal fraud. This metric can be combined with the above two metrics to discover if employees prefer a channel at a certain time, or if one department prefers a certain channel over another. It will reveal insights into which channels are easiest for employees to engage with. 

Anonymous Ratio

A useful metric to keep in mind is the number of anonymous reports compared to non-anonymous reports. If the majority of reports come from anonymous sources, this may suggest that employees are afraid of speaking out and facing retaliation. Although not a direct correlation, this ratio can point to the culture of compliance within the organisation. 

 

5) Ensure Clear Messaging from Management

Once the whistleblower hotline has been successfully implemented within the company, management must then let their employees know about it. The messaging from management should clearly emphasize the importance of speaking up and promote a culture of compliance.

This will motivate employees to use the hotline whenever they see something out of line. The more they use the hotline, the more cases of internal fraud that management can investigate, and the better it is for the company. 

Conclusion

Employees are on the ground floor of an organisation, seeing and hearing things that management can easily miss. It is therefore crucial for management to establish an effective means of listening to their concerns if they spot instances of internal fraud. Key points of consideration include whether a company’s whistleblower hotline should be internal or external, what communication channels it will use, the implementation of a case management system, what metrics it should measure, and what messaging should come from management. With these in mind, companies should be able to create a successful whistleblower hotline.

Whistleblower hotlines are a key asset in preventing internal fraud

Whistleblower hotlines are a key asset in preventing internal fraud.

Making your hotline confidential will ensure employees feel comfortable using it.

Making your hotline confidential will ensure employees feel comfortable using it.

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Learn more about how Polonious can help you implement an effective and confidential whistleblower hotline.

Common Phrases That Are Red Flags for Internal Fraud

Common Phrases That Are Red Flags for Internal Fraud

Prevention is very often the best way of dealing with internal fraud. Being able to nip the problem in the bud will produce much better outcomes for a company than finding out that fraud is already occurring when it is already too late. With that being said, all companies should be aware of the warning signs that may flag when an employee is planning to, or is currently engaging in internal fraud.

Software developed by the FBI and Ernst & Young has discovered the most common phrases that are used in email conversations among perpetrators of internal fraud. Through this technology, more than 3,000 words and phrases were identified. The software can also detect unusual changes in tone that can suggest an underlying problem. 

List of Phrases

The phrases identified by the Ernst & Young software are a good indication that fraud may be occurring within a company, especially if they come up on a regular basis. The top 15 phrases are listed below:

  1. Cover up
  2. Write off
  3. Illegal
  4. Failed investment
  5. Nobody will find out
  6. Grey area
  7. They owe it to me
  8. Do not volunteer information
  9. Not ethical
  10. Off the books
  11. Backdate
  12. No inspection
  13. Pull earnings forward
  14. Special fees
  15. Friendly payments

Some phrases describe the fraud itself, including “Cover up,” “Write off,” “Illegal,” and “Grey area.” Other phrases suggest that employees want to defend their actions, such as “Nobody will find out,” and “They owe it to me.” Phrases like “special fees” and “friendly payments” are used in cases of bribery. Further phrases indicate that the employee is acting with a co-offender, describing how the fraud will take place in phrases like “Do not volunteer information,” “Off the books,” and “Pull earnings forward.” 

The software also searches for outside events such as “call my mobile” and “come by my office,” which suggests that the employee does not want to be overheard. 

Employees who do not wish to partake in these fraudulent activities with a fellow employee often use words like “no inspection,” “do not volunteer information,” “want no part of this” and “don’t leave a trail.

It may seem improbable at first instance for employees to directly mail other employees about their fraudulent actions. However, it is more than likely that they are colluding with someone else or are searching for acceptance from others about their activities.

According to the developers, this targeted means of analysing suspicious email conversation will save companies millions, as it is able to warn companies before major frauds have occurred. The software also highlights the success of analysing words as a method of investigating fraud, which is typically only conducted by looking at a company’s numbers. 

The Fraud Triangle

A commonly used framework in auditing, the fraud triangle explains why an individual may decide to commit a fraud. It comprises the three components: Opportunity, Rationalisation, and Pressure. Many of the phrases that were identified by the software could be classified under one of these components.

Opportunity

Fraud is more likely to transpire when there is an opportunity to commit it in a concealed way. This can manifest in a few different ways, for example, having limited approval processes, weak internal controls, or poor communication from leadership. 

The Ernst & Young software identified a number of phrases relating to this section of the Triangle, such as:

  • Nobody will find out
  • No auditor will review it
  • Nobody asks anything
  • The policy does not say anything about it
  • Bosses don’t ask

Rationalisation

This component refers to the individual’s justification for committing the fraud, to the point where they feel that their actions are acceptable. They may feel that management is treating them unfairly and fraud is a way of getting payback. They may see upper management committing fraud and follow in their footsteps. They may feel that they have no other choice, for example losing their job, and fraud is the only option. Whatever their reasoning, dramatic changes in company culture are required to tackle this issue.

The common phrases associated with this element of the Triangle include:

  • They owe me
  • Everybody does it
  • I’m not hurting anyone
  • They don’t pay me enough
  • Nobody has to know

Pressure

The final segment of the Triangle refers to an employee’s mindset towards committing fraud. Employees may be under pressure to meet targets that are tied to their remuneration, which may cause them to commit fraud to meet these objectives. There may also be pressure from investors and key stakeholders to increase the company’s share price, which can further impel them to commit fraud. 

The phrases discovered by the software relating to pressure include:

  • My bonus depends on this
  • Bosses are pushing me to do this
  • I should reach the numbers
  • The goal is very high

 

What was said about the Software

In a press release for the software, Rashmi Joshi, director of Ernst & Young’s Fraud Investigation & Dispute Services, noted that “Despite being the prime means of all conversations, unstructured email data plays almost no role in the compliance efforts of firms.

“Most often such email traffic is only seized upon by regulators or fraud investigators when the damage has been done.” 

Clearly, email plays an important role in fraud detection and should be one of the first things managers look into when trying to uncover the warning signs of fraud. This technology is especially relevant for financial services companies, who demand more effective and less costly compliance monitoring. Joshi goes on:

“Firms are increasingly seeking to proactively search for specific trends and red flags – initially anonymously – but with the potential for investigation where a consistent pattern of potential fraud is flagged.”

One of the main benefits of detecting these key indicators of fraud is that the company is one step ahead of the game. It is one thing to merely identify the red flags, the company should then be proactive and launch an investigation into whether internal fraud is occurring and its extent within the company. 

How Polonious can help 

Polonious has seamless integrations with analytics engines, so we can pick up flags like these and automatically create an investigation.

Our case management system is flexible and adaptable to your needs. Once these warning signs have been spotted, any information that is needed for an investigation is just a few simple clicks away via our extensive list of integrations. 

We can design and build workflows for you that are compliant with relevant legislation. Our Status Action Metric Evidence methodology ensures that investigators can only perform allowed actions at the relevant stage of an investigation, while gated decision points ensure that the investigation cannot move forward without a decision and a justification. Strict security and a full audit trail also ensure that you are compliant with any audit requirements. All of this while adding minimal administrative/compliance burden to your investigators.

One of the biggest complaints we hear from investigators is the considerable amount of time spent on administration. Our system has a number of administration time saving features to combat this issue, including triage steps (so you can quickly remove false positives) and automation of communication. This results in a dramatic reduction in phone calls, follow ups, and requests for updates.

Overall, this leads to a 38% reduction in the total time to complete an investigation, or 134 minutes on average. Since this time is non-billable, the savings are translated into an immediate ROI for your company.

Other key features of Polonious’ case management system include fully customisable dashboards, and an ‘entity mapping’ report builder that lets you pick and report on any field in the system using a simple checkbox system. These features emphasise ease of use and cater towards what you want from your system.

The system also allows integration with Tableau, and more recently, is able to integrate with Maltego for graphical link analysis. These reporting tools allow you to spot trends in identified and confirmed fraud cases and so better target your detection efforts.

There are many warning signs that there may be fraud occurring within your business. These warning signs can be categorised into the three main drivers of fraud, which are Opportunity, Rationalisation, and Pressure. It is worthwhile launching an investigation if these red flags come up consistently to ensure that any fraud is stopped at the source. 

Polonious’ easy-to-use case management system can pick up on these flags and immediately launch an investigation that reduces administration time and caters towards your needs. 

 

Workplace bullying can cause significant psychological distress and put your organisation at risk of litigation as well as absenteeism and staff turnover.

EY has developed a method of detecting phrases relating to internal fraud.

However workplace bullying is not limited to aggressive behaviour, and includes many other forms of treatment including ostracising particular employees.

The fraud triangle can classify the common red flags of internal fraud.

However workplace bullying is not limited to aggressive behaviour, and includes many other forms of treatment including ostracising particular employees.

Excessive workplace pressure can lead to internal fraud, as employees struggle to meet targets without altering the numbers.

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Learn more about how Polonious can help you investigate internal fraud.

8 Tips for Preventing Internal Fraud

8 Tips for Preventing Internal Fraud

What is Internal Fraud?

Internal or corporate fraud is the deliberate misuse or misapplication of a company’s resources or assets by an employee for their own personal gain. Put simply, internal fraud occurs when an employee, manager, or executive commits fraud against their employer. This is as opposed to external fraud in which customers, vendors or other parties commit fraud against a company.

 

Some examples of internal fraud include:

    • Skimming: A form of theft where the offender steals money before it is registered in the accounting system. A common skimming method involves an employee collecting payment from a customer for the sale of a product and then retaining the money for themself without actually registering the sale.
    • Theft: Money or stock is stolen by the offender that is already registered in the accounting system, often by stealing money from the cash register immediately after processing sales transactions.
    • Invoice Fraud: The offender draws up fraudulent invoices and processes them in the supplier system, for example using company credit or debit cards for personal use.
  • Wage Fraud: Similar to invoice fraud, the offender forges invoices, this time to force the company to pay a salary to third parties that they may be an accomplice with. 
  • Expense Fraud: For this form of fraud, the offender manipulates expense claims to be reimbursed for non-commercial expenditure. 

 

According to the Australian Institute of Criminology, internal fraud resulted in a loss of $2.7 million to Australian businesses in 2018-19, which includes stolen stock, cash, and damaged business reputation. More concerning is the fact that much fraud still goes undetected and unreported each year. 

 

However, there are many ways that managers can prevent internal fraud from occurring within their businesses, and deter employees from engaging in this form of fraud in the future.

Tips

1) Develop Clear Policies

It is important to establish clear and easy to understand policies to keep rules from becoming arbitrary and ensure that all employees are conscious of what the company expects of them. These policies should cover areas such as:

  • Serving or processing transactions for friends or family
  • Personal purchases and transactions
  • Personal use of company equipment like telephones, computers and printers

 

The reason for having these policies is twofold. Firstly, those who intend to commit internal fraud will be deterred knowing that management is aware of this fraud and has enacted clear policies to prevent it. Secondly, honest employees who will not commit internal fraud will become familiar with the possible signs of fraud and will be more likely to report it. These employees will also gain more clarity on what constitutes fraud so they can avoid accidentally committing it.

 

2) Have Clear Transaction Procedures

For similar reasons as above, companies should have clear procedures for dealing with transactions as this is often where internal fraud occurs. These procedures can include petty cash limits, keeping registers closed unless they are in use and the provision of receipts to acknowledge transactions. 

 

Companies should also segregate the processes of purchasing, receipting and paying, and have two people conduct daily banking if possible. The segregation of duties is an essential element of preventing internal fraud as it ensures that no employee has the ability to perpetrate and conceal errors or fraud during their normal course of duties. Additionally, employees will also be able to provide checks and balances on one another. 

 

3) Implement Strong Supervision of Staff

Employees are less likely to commit fraud if they know that they are being watched by management. When an employee is able to perform duties without supervision or authorisation from a higher up, there is a risk that they will act in their own self-interests. Some points to consider when implementing supervision include:

  • Supervise employee compliance with procedures
  • Regularly review cash shortages and investigate instances where an explanation is unsatisfactory
  • Have supervisors consistently check receipts and documentation
  • Look into suspicious transactions
  • Review of personnel

 

4) Set up a Reporting System

Although supervisors may catch employees engaging in fraud by looking into suspicious activities, an important source of detecting fraud are the employees themselves. Although employees are often hesitant to report incidents to their employers, this can be overcome by setting up an anonymous reporting system. Other sources also include customers, vendors and competitors. 

The Association of Certified Fraud Examiners reports that 40% of occupational fraud is detected because of a tip, the most of any other source. Consequently, businesses must ensure that they have appropriate reporting systems in place. 

 

The most common formal reporting mechanisms used by whistleblowers that businesses should consider implementing are:

  • Telephone hotline
  • Email
  • Web-based/Online Form
  • Mailed Letter/Form

 

Reporting systems will act as an effective deterrent against employees who would engage in fraud but are afraid of being reported by their fellow employees.

 

5) Perform Accounting Reconciliations

Fraud is often successful when it is well concealed. A way of combating this issue is performing regular accounting reconciliations and catching irregularities that may point to a case of fraud. Again, potential perpetrators of fraud will be deterred from committing fraud if they know that the accounts are being frequently looked over. 

 

The accounting reconciliations that business should undertake at least on a monthly basis include:

  • Bank reconciliations (for all accounts)
  • Accounts receivable reconciliations (both month to month and general ledger to sub-ledger)
  • Accounts payable reconciliations (both month to month and general ledger to sub-ledger

 

Not only will performing accounting reconciliations give an indication of potential fraud, it will also have the added benefit of helping managers make decisions and ensure the accuracy of the accounting records.

 

6) Establish Strong Human Resource Procedures

One of the best ways to prevent a problem is to stop it from the source. For fraud, this means hiring the right people and training them. 

 

Businesses can implement procedures such as:

  • Check references and perform background checks. This includes employment, credit and criminal history. 
  • Have formal, specific job descriptions. A red flag for fraud is when employees perform duties outside their job description.
  • Appropriately train employees. Not only will employees learn what constitutes fraud, they will also be able to recognise and report any suspicious behavior.
  • Implement an equitable remuneration system. Some employees may engage in fraud if they feel their remuneration is inadequate.

 

7) Constantly Monitor Your Assets

Although quite a simple measure, constantly monitoring your physical assets is a crucial step to prevent employees from engaging in stealing. Businesses should also have stringent control over their intangible assets, such as their knowledge and information. 

 

Examples of measures that businesses can put in place include:

  • Conducting regular stocktakes
  • Restricting physical access to only those who require it to perform their job function
  • Locking doors, desks and filing cabinets
  • Implementing electronic surveillance systems
  • Using employee IDs and passwords

 

These measures are the most visible to potential offenders of fraud and are therefore the strongest deterrent. While these measures do not necessarily entirely eliminate the risk of fraud, reducing the potential offender’s access to these assets will reduce the likelihood of fraud occurring.

 

8) Get Expert Help

Sometimes the numbers still won’t add up, even after implementing all of the above fraud prevention recommendations. If that is the case, then it may be worthwhile hiring a professional auditor to have a look at the company’s books. 

 

A Certified Practising Accounting (CPA) or Certified Fraud Examiner (CFE) can perform an extensive review of the company’s accounts and control processes, without having any personal relationship with the company to cloud their judgement. They can help with fraud detection and prosecution if necessary. 

 

These auditors will also ensure the books comply with government regulation, add credibility to the financial statements after their review, and point out key processes that may need improvement. However, a key factor to consider is the steep cost of hiring these auditors.

Conclusion

Employee fraud can take on many forms, but all of them represent a detriment to the business. It should be the priority of all businesses to implement procedures that prevent and deter internal fraud to prevent further losses. Not only will this have a substantial financial benefit, it will also promote a healthy company culture, with new employees learning the correct way of doing their job, that minimises errors and promotes good communication throughout the organisation.

Internal fraud can come with consequences for your organisation beyond merely what the employee took.

Internal fraud can come with consequences for your organisation beyond merely what the employee took.

Internal fraud cost Australian businesses $2.7 million in 2018-2019, and that's just what was detected.

Internal fraud cost Australian businesses $2.7 million in 2018-2019, and that’s just what was detected.

The most important thing you can do when investigating internal fraud is 'follow the money'. People commit fraud to benefit themselves, and they won't accidentally send it to the wrong person. Wherever the money ends up, they are likely the perpetrator or a close contact.

The most important thing you can do when investigating internal fraud is ‘follow the money’. People commit fraud to benefit themselves, and they won’t accidentally send it to the wrong person. Wherever the money ends up, they are likely the perpetrator or a close contact.

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Financial Abuse: What is it?

Financial Abuse: What is it?

Domestic or family violence refers to violence, abuse and/or intimidation between people who are currently or have previously been in a ‘relevant relationship’.

These relationships may involve:

  • Past or current spousal relationships regardless of gender or sexuality (including de facto relationships)
  • Informal care relationships (including unpaid carers of people with a disability or a medical condition)
  • Family relationships (including non-blood relatives or extended family)
Financial abuse is a common yet seldom recognized form of abuse.

It can be difficult to recognize for reasons such as:

  • Some individuals viewing money as a private matter that shouldn’t be discussed
  • Its subtlety, and progression over time
  • It being acceptable in some cultures for one member to control the finances for the entire household

However, the effects of financial abuse can be devastating and far reaching; ranging from practical to psychological effects.

Everyone has a right to be safe from such abuse. It is important to be able to identify the signs and support clients who are experiencing such abuse.

This guideline is designed to help you to understand what financial abuse is, and recognise signs that a customer may be potential victims.

What is Financial Abuse?

Financial abuse is a form of domestic and family violence which occurs when an abuser uses money and resources as a means to gain power, and to control their partner or family member. 

This may involve behaviors such as:

  • Threatening, coercing re: assets or wills;
  • Taking control of the person’s finances against their wishes and denying access to their own money;
  • Abusing Powers of Attorney;
  • Stealing goods, e.g. jewellery, credit cards, cash, food, and other possessions;
  • Unauthorised use of banking and financial documents;
  • Forged or unauthorised signatures on documents or cheques.
What are the Common Indicators of Financial Abuse?

It is hard to detect financial abuse without considerable knowledge of the victim’s financial and/or legal affairs. Fortunately, financial institutions and legal officials are well positioned to detect financial abuse.

Here are some common settings or circumstances which may be indicative of financial abuse:

Deviations from typical banking behavior

Unusual banking behavior may indicate financial abuse. This involves bank activity that is erratic, unusual, or uncharacteristic and bank activity inconsistent with what you know of the person’s abilities or interests.

For example, withdrawals from or transfers between bank accounts that an individual cannot explain or unusual/unexplained activity such as unreasonably large withdrawals. Other indicators may be bank statements and canceled checks sent to an address that is not an elder person’s residence.

Unusual financial situations

An indicator might be when checks uncharacteristically begin to lack adequate funds to cover them and/or when a client is in debt and does not know why. Financial abuse may be suggested by complaints from the elder person about once having had money but not seeming to have much anymore, or the sudden inability to pay bills.

Unusual legal transactions

Financial abuse can also be indicated with legal transactions. This may include the execution of legal documents or arrangements, such as powers of attorney, by an older person who is confused or who does not understand or remember the transaction. Other signs are suspicious or forged signatures on documents and changes in the older person’s property, titles, will, or other documents, particularly if the changes are unexpected, sudden, or favor new acquaintances.

Home Visits

A number of indicators may also be apparent if you are able to visit the  home/residence of a person. For example, a disparity between living conditions and money. Such as the lack of substandard care, a decline in personal grooming, or an absence of clothing, food, or other basic necessities when an individual can afford them.

The Risk of Financial Abuse for the Elderly Population

Recent studies suggest that financial abuse — the illegal or improper use of an older adult’s funds, property or assets — is one of the most common forms of elder abuse. Although financial abuse may affect anyone, the elderly are frequent victims due to diminished physical or mental capacities.

Unlike other forms of abuse and neglect, financial abuse is more likely to occur with the tacit acknowledgment and apparent consent of the elder person, and is often difficult to detect and establish. Some forms of financial abuse may even seem like displays of affection, like a family member offering to take control of the finances to take the pressure off another, but is really an attempt to control their access to money.

Abuse of Power of Attorney

A power of attorney allows an individual to plan for the future and choose someone to manage a range of significant matters if they are unable to do so themselves in the future. This may include financial matters, medical treatment or living arrangements. 

An individual can abuse the Power of Attorney for almost any financial purpose including:

  • signing legally binding documents
  • operating bank accounts
  • paying bills
  • buying and selling real estate
  • managing investments
  • collecting rent

Legal Obligations of the Power of Attorney

Attorneys have a legal obligation to act in the best interests of the individual, maintain separate accounts and records and avoid a conflict of interest.

Attorneys who act outside the scope of authority permitted by the Power of Attorney, misappropriate an individual’s assets or fail to act in the individual’s best interests are abusing their position.

Examples include situations where an attorney may:

  • neglect paying for necessities on behalf of the individual;
  • make decisions and take action without consulting the individual or, in the case of an incapacitated individual, fail to consult with those who are close to them;
  • use the individual’s funds for their personal benefit;
  • sell or transfer the individual’s assets for their personal benefit

Laws, terminology and processes around the power of attorney differ across states and territories.

Roadmap for Progress on Combating Financial Abuse

 

The spectrum of activity entailing financial abuse can reach far beyond individual sectors. Legal institutions, insurance companies, financial services, senior care facilities can unwittingly facilitate this abuse.

Financial abuse poses a risk not only to clients but industries as well. Inadequate measures to identify and/or counteract financial abuse can lead to reputational risk and a breakdown in client trust as well. While the risks posed by financial abuse can be large and varied, this also presents an opportunity for industry players to better assist clients. Effective measures to identify, counteract and stem the flow of such financial abuse, may serve a major source of differentiation, driving further customer/client satisfaction and company success. 

Further blogs will outline tips on how you can play your part in preventing and investigating financial abuse on behalf of your customers.

Financial abuse is a common yet seldom recognized form of abuse.

Financial abuse is a common yet seldom recognized form of abuse.

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Want to learn how Polonious can help you investigate and protect your customers from financial abuse?

Better Workplace Investigations: 10 Steps to Ensure Procedural Fairness

Better Workplace Investigations: 10 Steps to Ensure Procedural Fairness

Navigating a workplace investigation is often a difficult task. Errors in investigations can result in tribunal hearings or court cases and may jeopardise subsequent decision-making. If you are conducting a workplace investigation that may adversely affect the rights and interests of an employee, it is particularly important that you ensure your decision-making is procedurally fair.

In this blog we will discuss the 10 things you can do, to ensure your investigation is fair and robust.

What is Procedural Fairness?

Procedural fairness in a workplace investigation relates to fairness of the procedure by which a decision is made, as distinct from the fairness of the decision or outcome itself.

To ensure a workplace investigation is procedurally fair, as well as any decisions based on that investigation, there are a few key considerations:

  • the employee must be informed of the case against them, including all of the relevant facts and evidence, policies and legislation to be relied upon
  • they must be provided with a fair opportunity to provide their version of events, or their response to the allegations
  • the decision maker or investigator must fairly consider the employee’s response when making their decision
  • the investigation, and subsequent decision, must be free from bias – both actual bias and apprehended bias.

If you follow these steps, you are ensuring you are complying with both the ‘hearing rule’ and the ‘bias rule’ of procedural fairness.

It may not always be clear if a duty to afford procedural fairness exists in general employment decision making, such as when declining a period of leave. However, an investigation is a much more serious matter and so comes with an obligation to follow a fair and transparent process.

When you are conducting a workplace investigation that may lead to an adverse outcome for the employee, such as disciplinary action or termination, you must ensure your decision-making is free from bias, and that the employee receives a fair hearing.

Many unfair dismissal applications are successful at the Fair Work Commission due to the absence of procedural fairness, so it is vital to understand the fundamental requirements of a fair workplace investigation.

This guide is designed to provide you with an understanding of the essential components of procedural fairness and how this applies to both the investigator and employee.

It’s important to remember that what procedural fairness requires will change on a case-by-case basis. For example, there is no hard and fast rule about what a fair length of time may be to enable an employee to respond to allegations of misconduct.

Allowing seven days for a response will not be sufficient in every situation. For instance, if your investigation has produced 2TB of evidence, and you intend to rely on this to make an adverse decision, its highly likely the employee will need more than seven days to fairly consider the adverse evidence, and make a statement in reply.

So, what steps can you take make sure your workplace investigation is fair?

1. Inform the employee of the case against them.

The first step is to make sure the employee is aware of the case as soon as practical, so they feel they have been involved in the whole process. Of course, this must be balanced with other considerations in certain cases – such as the safety of any possible complainants while you make alternative work arrangements.

2. Let them know the likely timeframe for conducting the investigation, and keep them informed if there are any delays.

This sets reasonable expectations for all parties in the investigation.

3. Let the employee know of any supports available, such as an Employee Assistance Program or that they can bring a support person with them to an interview.

An employee is likely to be affected emotionally by an investigation, and they may need support. Additionally, this may cause them to have problems presenting their version of events during an interview, for reasons more to do with their emotional state than the strength of their case, which may leave them feeling that the interview was unfair. Allowing them a support person will prevent this.

4. Make sure you follow the investigation steps as outlined in your Workplace Investigation Policy/Procedure.

A key part of procedural fairness is a transparent, repeatable process which will be the same regardless of the circumstances. An employee should feel comfortable that they are receiving the same treatment regardless of their role, internal relationships, demographic factors, or otherwise.

To this end, you should have or develop a workplace investigation policy which you follow as much as possible. In the event that you cannot follow the policy exactly, the employee should be informed about any deviation.

5. Ensure the employee has a fair chance to respond to the allegations, and make their case in reply.

Perceptions of fairness rely heavily on an employee feeling heard, and you cannot make a fair decision without evaluating their version of events. The employee who is being investigated must always be given a chance to respond to the allegations. 

6. If you vary any allegations, or obtain any new evidence, along the way, ensure the employee is aware, and has an additional opportunity to respond.

Additionally, you cannot change allegations or obtain further evidence after an employee has responded, without giving them an additional chance to respond to the new allegations or evidence. By the time the investigation concludes, the employee must have had an opportunity to respond to the entire case against them, not a partial case at some earlier stage.

7. Keep an open mind.

Investigators are people, and people are prone to bias, however an investigator must keep an open and impartial mind as much as possible. Certain workplace investigations may be emotionally laden, and may drive you to lean towards one conclusion or another, because of how you feel about the alleged behaviour (whether proven or not) or the circumstances or persona of the subject or any complainants.

However you must keep an open mind until the end of the investigation, and let the evidence guide you. Someone may have done the wrong thing even if they’re a ‘nice’ person, and someone may be innocent of the allegations even if they come across as a ‘bad’ person. 

8. When drawing any conclusions, ensure they are supported by a fair weighting of the available evidence, and are not arbitrary or irrational.

To that end, you must consider all evidence with a fair weighting. For example, if independent witnesses, computer records, or CCTV footage fail to corroborate an allegation, this must be given more weight than if the employee seemed suspicious or hostile in an interview. They could be hiding something, but that thing may have nothing to do with the investigation. Or, they may simply, understandably, be annoyed at being investigated if they feel they did nothing wrong.

9. Communicate your decision, and the reasons for your decision, to the employee.

Obviously, you must communicate your decision to the employee. If the allegations are not proven, then they should not have the stress of the unknown hanging over their head. If the allegations are proven, then they should have some warning or personal contact before any further action is taken against them – it should not come as a surprise.

Additionally, providing the reasons for you decision will help increase perceptions of procedural fairness, as they may not agree with the outcome but they can understand how it was reached. That is, they may not feel the decision was fair – it is natural for people to feel an adverse decision was somehow unfair – but they can accept that the process itself was fair.

10. Keep good records of your investigation process, to rebut any procedural fairness arguments that may be raised once your decision has been made.

This last step is less about the employee’s perception of fairness and more about ensuring that you can prove the process was fair should an employee feel aggrieved after the investigation and appeal, internally or especially externally. You should maintain a complete record of the process and all of the evidence to ensure that you can present this to a reviewer, a tribunal, or a court.

We know that employees are more likely to accept an unfavourable decision if they feel they have had a fair decision-making process. That’s why communication is so important throughout the above steps.

How can Polonious help?

Polonious Case Management System (PCMS) is designed to provide a rigorous, repeatable process that is compliant with any regulatory requirements. PCMS can turn your workplace investigation policy into a workflow, with gated decision points, reminders, and tight security, to ensure you always follow step 4 above.

Additionally, as the system is process centric, you can focus on following the evidence to the conclusion, instead of focusing on making case notes on a personnel file (step 7).

Our secure portal and email integration make investigations easy for investigators, as well as ensuring the employee has a chance to respond to allegations (step 4) and will stay informed throughout the investigation (steps 1-6 and step 9).

Lastly, Polonious keeps a full record of the process and any evidence obtained, including reasons for decisions and timeframes (steps 8 and 10).

Further, our system automates much of the paperwork and communication, meaning you can focus on conducting a thorough and fair investigation, instead of completing paperwork and updating other systems.

Interviews are not only a chance to establish facts - giving an employee a chance to be heard is a crucial part of ensuring perceptions of procedural fairness in a workplace investigation.

Interviews are not only a chance to establish facts – giving an employee a chance to be heard is a crucial part of ensuring perceptions of procedural fairness in a workplace investigation.

Ensuring your workplace investigation process is as consistent as possible across all investigations will also maintain perceptions of procedural fairness

Ensuring your workplace investigation process is as consistent as possible across all investigations will also maintain perceptions of procedural fairness.

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8 Tips to Make Workplace Bullying Investigations More Effective

8 Tips to Make Workplace Bullying Investigations More Effective

Over the past decade, there has been growing acceptance of the importance of Corporate Social Responsibility. Workplace Bullying is often defined as a repeated unreasonable behavior which creates a risk to health and safety.

What is Workplace Bullying?

Bullying behavior in the workplace may include:

  • aggressive, threatening or intimidating conduct
  • excluding someone from work-related events
  • unreasonable work demands
  • belittling or humiliating comments
  • pressuring someone to act inappropriately

Reasonable management action does not constitute bullying. These actions may include actions such as: performance management processes and informing a worker about unsatisfactory work performance. However, if not conducted in a reasonable manner, these actions could still be considered workplace bullying. 

Bullying behaviors can cause serious psychological harm and increase psychosomatic complaints in victims. Organizational effects include lower job satisfaction, absenteeism and turnover. All these negative outcomes can potentially harm the individual’s as well as a company’s overall performance.

Companies face civil and criminal penalties if they breach the care of their workers. For example, in 2019, Australia introduced the Enhancing Whistleblower Protections Bill which provides enhanced protection for those who report unethical activities such as:

  • harassment or intimidation of a person;
  • harm or injury to a person, including psychological harm
  • discrimination

Protecting workers from bullying and harassment has increasingly become a priority issue on the public agenda. The Fair Work Act 2009 also covers contractors/subtractors, volunteers, outworkers and students gaining work experience as well.

Workplace investigations are a process by which employers gather information to assist the employer to make an informed decision. This typically involves enquiring, collecting information and ascertaining facts. However, investigating bullying behaviors in the workplace is a difficult task. 

When conducted poorly, this may adversely affect the company’s reputation and result in costly legal suits.

Before embarking on a workplace bullying investigation, we recommend following this guide to ensure that the investigation will yield best results.

1. Take Immediate Action

The importance of timing is one of the most critical, yet often overlooked, elements of an investigation. Failure to act quickly and decisively has concerning implications.

Companies risk immediate consequences such as absenteeism, excessive sick leave and reduced productivity. Taking immediate action is critically important to not only protect the workers from harm but to also protect the company and avoid legal liability. Review bodies such as tribunals or courts  may evaluate the timeline of the investigation and determine whether interviews were conducted in a timely manner. 

Initial decisions that may also need to be considered are:

  • Should we suspend the person who is causing the harm or the alleged threat, pending an investigation to follow? 
  • Who do we need to inform of the situation, such as the Board or law enforcement?

Employers may seek to place an employee on administrative suspension. However, unreasonable suspension holds serious consequences and can result in much heavier costs for the company. A thorough risk assessment must be carried out prior to making a decision.

Things to be considered before making this decision:

  • Whether the suspension is done according to a fair process and for a fair reason
  • Whether the suspension is in accordance with the disciplinary policy, though you may do so without an express clause in the suspension contract (Avenia v Railway & Transport Health Fund Ltd [2017] FCA 859)
  • Further harm to the alleged victim and other workers should the respondent remain in the workplace
  • Payment to suspended employee suspension must be paid unless under exceptional circumstances

If parties involved in the allegation are away for a planned absence or holiday, it is best practice to document the reasons for delay.

2. Review Workplace Bullying and Investigation Policies

Before launching an investigation, it is important to ensure that the investigation is in line with the organization’s policies and protocols. It is also important to frame the investigation and know in advance what your organization defines as bullying or harassment, so you can assess whether the reported behaviour is actually bullying.

Every organization should have a policy or procedural guideline which outlines investigation protocol. This assists the handling of workplace bullying and harassment complaints.

However, policy changes may be required to stay up-to-date or to ensure clarity. In this case, edits must be authorized and documented. It is best practice to communicate with affected parties before proceeding to the next step.

3. Choosing an Investigator

Investigations are best performed by individuals who can impartially gather the evidence and promptly present it to key decision makers if necessary. Having a fair and impartial investigator helps shield them and your organisation from potential claims that the investigation was inadequate.

The person conducting the investigation should:

  • treat all matters being investigated seriously and confidentially
  • have no conflict of interest
  • record and examine matters objectively based on facts 
  • identify and speak to all relevant witnesses

While arranging an internal investigator may be less costly, hiring an external investigator may offer greater legal expertise and neutrality. This minimizes the risk of litigation, and should litigation ensue, the report may be covered by professional and legal privilege.

4. Create a plan for the Investigation

Gather all the relevant information such as an employee complaint, supervisors report, and evidence such as emails and letters surrounding the matter. Using this information, consider what questions need to be asked, who the potential witnesses are, and whether employees and supervisors can provide any additional material. When preparing investigation questions, ask open-ended questions rather than leading questions to elicit as many details as possible. This also helps minimize potential bias.

5. Maintain Confidentiality

The investigation should protect the confidentiality of all parties involved. Details of the investigation should not be released unless legally compelled to do so. This helps ensure that the reporter of the bullying behavior is not victimized.

Oftentimes, allegations, even when proved groundless afterwards, can be harmful to an individual or company. Confidentiality ensures the protection of the person accused, the witnesses, and the organisation as well.

6. Conduct Strong Interviews

A strong interview depicts an accurate picture of the situation. It must include specific details such as time and place the incidents took place and whether the incident was discussed with anyone else in the department or company. Although most workplace bullying investigations usually involve the employee accused and the alleged victim, if you believe someone may have seen or heard something important, you may want to interview the witness and get their perspective as well. Make sure that the interview is not taken in the presence of other people to maintain confidentiality.

7. Document the Investigation

A good investigation report is detailed and accurate. All informal conversations, meetings, and interviews must be documented, detailing specific dates and times, who was present, what was discussed, and the agreed outcomes. Some investigations may also require the gathering of other types of evidence such as stolen items, weapons, etc. The report must also explain how and when the complaint came to attention, and what you did about the problem. 

An investigation report may later be used in proceedings at tribunals or a court of law. Using a case management software ensures safe and easy management of investigation summaries, interviews, evidence and all necessary documents. If you would like to see how you can generate one-click investigation reports and make it easy to generate briefs of evidence, please click here.

8. Stress Management

Workplace bullying investigations could be incredibly stressful for all parties involved. As stress and fatigue can build up during the investigation, it is vital to exercise effective stress management strategies in order to exercise good judgment and to remain level headed from the initial report to the closure of investigation. You may wish to refer some or all parties to internal or external counselling services. Importantly, you should maintain communication and follow a rigorous process, so all parties know they have been treated fairly and impartially.

The Polonious SIU Case Management System (PCMS) is an agile tool specifically designed to cater to the unique dimensions of each workplace investigation, while providing a rigorous, repeatable process that is compliant with any regulatory requirements. This safe and secure tool adds an additional layer of protection. 

Workplace bullying can cause significant psychological distress and put your organisation at risk of litigation as well as absenteeism and staff turnover.

Workplace bullying can cause significant psychological distress and put your organisation at risk of litigation as well as absenteeism and staff turnover.

However workplace bullying is not limited to aggressive behaviour, and includes many other forms of treatment including ostracising particular employees.

However workplace bullying is not limited to aggressive behaviour, and includes many other forms of treatment including ostracising particular employees.

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