Adopting a Whistleblowing Policy for Your Non-Profit

by Megan Lausten, CPA, Senior Associate

If there were fraud occurring in your organization, how would it be discovered? It is common to assume that the best way to discover fraud is through an independent audit. Surprisingly, only 3% of workplace fraud is detected during an independent audit, according to the Association of Certified Fraud Examiners’ (ACFE) 2012 Report to the Nations. Instead, most instances of fraud (34%) are exposed by tips from employees, directors, members and volunteers.

This statistic emphasizes the importance of having a policy that encourages people to report their concerns without fear of retaliation. Such a policy is referred to as a whistleblower policy. Adoption of a whistleblower policy is a good governance practice which can be reported on Form 990. There are several factors to consider in the adoption of a whistleblower policy for your organization.

Implement a fraud hotline.

According to the ACFE’s 2012 Report to the Nations, organizations that had an anonymous fraud hotline suffered significantly less losses from fraud than those who did not. Employees and volunteers are more likely to report a concern in a timely manner if it is easy to report. Organizations can create an anonymous submission form on their website or outsource the hotline services.

Develop a chain of command.

A whistle-blower policy should designate responsible individuals within the organization to receive and respond to tips. Response to fraud tips should involve both members of management and the governing body. A common practice is to designate a compliance officer, such as the Executive Director or Human Resources Director. The compliance officer would be responsible for receiving fraud tips and reporting them in a timely manner to the appropriate members of the governing board. If the organization has an audit committee, the chair of the committee would be an appropriate governing board designee.

Investigate tips.

Have a plan of action for how to respond to tips. The compliance officer and governing board designee should be tasked with investigating tips in a timely manner. The investigation should ensure the fair treatment and anonymity of the whistleblower during the investigation. If necessary, hire an external investigator such as a Certified Fraud Examiner or any other resource deemed necessary to conduct a full and complete investigation of the allegations.

Respond to fraud.

If a fraud tip is verified via an investigation, the organization should take timely action. Put the responsible individual(s) on leave or terminate them, based on consultation with your attorney. File a report with the local law enforcement agency. Inform oversight agencies for funding sources affected by the fraud.

Protect the whistleblower.

Federal law prohibits all corporations, including nonprofits, from retaliating against employees who "blow the whistle" on their employer’s accounting practices. Additionally, over 45 different states have enacted laws to protect whistleblowers from retaliation at the workplace. Have a policy that clearly communicates that retaliation taken against a whistleblower is not acceptable. The policy should include actions that will be taken in case of retaliatory action against a whistleblower, including termination of the offending employee.

Require tips to be in good faith.

The whistleblower policy should discourage false reporting. A whistleblower policy should require that tips are made in good faith and have reasonable grounds for the accusation. The act of making allegations that prove to be unsubstantiated or are made maliciously should result in disciplinary action up to and including termination of employment.

Inform stakeholders of the policy.

Because the policy is intended to encourage whistleblowing by anyone who may have relevant information, the policy should include and be disseminated to all affected stakeholders such as employees, directors, members and volunteers. While the employee manual is an appropriate method to communicate the policy to employees, ensure other stakeholders are made aware of the policy as well.

Further information and sample whistleblower policies are available from the American Institute of Certified Public Accountants (www.aicpa.org), the National Council of Nonprofits (www.councilofnonprofits.org), and Public Counsel (www.publiccounsel.org). However nonprofit organizations should also be sure to seek legal advice specific to their organization prior to adopting a whistleblower policy.

Settle Your Accounts With Accounting Outsourcing

Is accounting a burden for you? Or your accounting department is a mess? Well! Then this could be the most appropriate time to settle your accounts with quality accounting services. However, it is quite understandable that getting a good accounting department is not as easy it seems. First of all, finding qualified accountants is one demanding job and even if you manage to get the assistance of competent accountants, your expenses will soar excessively high with the high demands of these accountants. This kind of scenarios compelled the business industry to come up with a profitable alternative of accounting outsourcing. This provision has not served as an option but has actually taken the position of the most preferred accounting solution in the business fraternity. Nowadays, almost every small, medium or big business organization is affiliated with some or the other accounting outsourcing firm.

These accounting outsourcing firms are well recruited with efficient and experienced accountants who have won the attribute of sincerity and commitment. They are highly qualified in the field of accounts and offer best form of services. Moreover, many a time it happens that an owner has to focus on other departments of his or her business such as marketing and production that may cause negligence towards the accounting department. But if you are associated with a good accounting outsourcing firm , you need not worry for this negligence as the accounting experts will take thorough care of all your accounts and related projects. In addition to this security, you can also avail their guidance and suggestions during any financial hurdle or problem. Hence, it would not be incorrect to estimate a conclusion that assistance from an outsourcing firm for accounting is basically your route to numerous financial benefits. Therefore, if you are also wondering with your complicated accounting management then immediately look out for a decent accounting assistance.

We all know that money is the most important factor in business and hence, it becomes compulsory for us to focus on the expenses attached to the services of accounting outsourcing. Any outsourcing firm charges its client on the basis of the projects offered to them. The total budget is fixed according to the duration and the number of accountants employed for that task. However, every business owner can stay assured with the fact that no matter how long the duration is or how many accountants are recruited, the total expense would be much lesser than the amount paid to the in- house accountants. Moreover, you also get the liberty of not paying any additional allowances of house, medical and conveyance to these outsourcing vendors.

However, you must conduct a mandatory research about the various accounting outsourcing companies to ensure the best facility for your organization. Check out for their certification by a registered institution because accounting management involves great deal of sharing confidential data and documents. Hence, make sure that you get associated with a reliable source. All this research can easily be executed through the medium of Internet and pre-discussions with the firms as well as your friends who are already enjoying the benefits of accounting outsourcing.