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Why you should encourage whistleblowing in the workplace

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David Morgan

Managing Director – PKF Integrity

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Why you should encourage whistleblowing in the workplace

Whistleblowers have been found to be one of the most likely means of detecting fraud and corruption, according to the findings of the Association of Certified Fraud Examiners (ACFE) in its “Report to the Nations” 2018.

Organisations should encourage all employees to report suspected incidents of fraud, corruption and misconduct. A robust whistleblower policy encourages more employees to speak up, helps them feel that their opinions and complaints matter, and that the organisation or agency is serious about addressing unethical behaviour. Overall, it helps to reinforce a culture of transparency, honesty and accountability.

An effective whistleblower policy should define the types of conduct that may be reported (disclosures), provide details as to whom or where disclosures may be made, those responsible for the investigation of disclosures and provide the whistleblower with information on the probable course of action and the protections available to them.

It is apparent from the ACFE Report that a significant number of those who reported misconduct did not want their identities known. Whistleblowers often have a fear of being identified or retaliated against for making a disclosure. There have been many examples of whistleblowers in both Australia and overseas, who have paid a heavy price both personally and professionally, in acting ethically and reporting inappropriate behaviours. This issue is further compounded when employees don’t have confidence in the whistleblower framework inside the organisation that they work within.

Here in Australia, a current piece of research being led by Griffith University, called “Whistling While You Work Part 2” is currently analysing how management respond to whistleblowing across both the public and private sectors. The early survey results from that research indicate that most people inside Australian organisations understand how valuable whistleblowers are to uncovering wrongdoing. However, the survey results thus far also indicate that there is a distinct lack of confidence that an organisation will handle a whistleblower complaint appropriately. In PKF Integrity’s experience, this lack of trust unfortunately leads to a culture of underreporting inside the Australian workplace.

New Legislation: Treasury Laws Amendment (Whistleblowers) Bill 2017

The Australian Government has recognised these shortcomings and is set to introduce reforms which will broaden the existing protections and remedies available to corporate and financial sector whistleblowers. These will be through the amendment of the Corporations Act 2001, and creation of the Taxation Administration Act 1953. These reforms, likely to be introduced later this year, include:

  • All public companies and large proprietary companies (as defined by the Corporations Act) are required to have a whistleblower policy in place
  • Expanding the qualifications of whistleblowers qualifying for protection to include former employees and their relatives
  • Broadening the scope of conduct that may be subject to protected disclosures
  • Permitting anonymous disclosures that protect the identity of the whistleblower
  • Granting immunity in respect of the information that the whistleblower may provide
  • Expanding the protections and redress for whistleblowers including access to compensation in case of reprisal.

Similar protections are already in place for current and former public-sector employees and contractors under the Public Interest Disclosure Act 2013. Following the recent corruption scandals in Queensland’s local government, a new legislation (Councillor Complaints and Other Legislation Amendment Bill 2018), has recently been proposed in the state. This aims to improve the system of reporting and addressing complaints regarding the conduct of councillors and to further enhance the accountability and transparency in local government.

Practical Reporting Framework

Notwithstanding these new reforms, organisations and agencies should carefully consider how they implement a practical and effective reporting framework. The key wording in the legislation in relation to the required whistleblower policy ensures ‘fair treatment’ of a company’s employees. There are a number of components necessary to making this a reality, but a critical mechanism is one which will allow whistleblowers to make disclosures confidently and without fear of reprisal..

One of the mechanisms to do this effectively is through an independent whistleblower hotline, which provides employees with the confidence to escalate suspected incidents of fraud, corruption and misconduct without the fear of recognition, retribution or reprisal.

The employees within an organisation or agency assigned with the responsibility of receiving and/or assessing disclosures received from whistleblowers, should also be adequately trained to ensure effective management of such matters. Many organisations and agencies however elect to use an outsourced Whistleblower Hotline service as they are independent, often are a fully resourced 24/7 service and staffed by experienced investigation professionals who not only provide the right level of support to whistleblowers but are also able to ensure the right questions are being asked and the appropriate evidence is secured. Organisations need to then also ensure that their internal reporting lines have rigour, different avenues and a degree of independence. When your whistleblower is about to shed light on corrupt behaviour of a senior executive/manager, there are only a limited number of people who can probably help. A Whistleblower Hotline provides a discreet method for the whistleblower to seek assistance which can ensure your business maintains its integrity and reputation.

PKF Integrity is conducting a roadshow in October 2018 across Australia, where it will present on the many different facets of developing an effective reporting framework, how a whistleblower can be an asset to an organisation and how to ensure that wrongdoing is uncovered. PKF also provides an independent Whistleblower Hotline run by a team of expert investigators.


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