Does your whistleblower policy have teeth?

Most associations have a whistleblower by now, as they should.  Even the IRS wants to know if non-profits have a policy because it is now a question on the new 990 page 6.  It is an important part of an internal control structure and the idea of having one makes a lot of sense.  It is one thing to have a policy, but is a completely different thing to have an effective policy.  Communication is the most important part of an effective whistleblower policy.  It doesn't do a whole lot of good to have a whistleblower policy that the employees and board members don't know about or understand.  Handing an employee a handbook when they are hired does not communicate the purpose and function of the policy.  Most employees only browse through the handbook and read the sections that interest them.  It should be verbally communicated to employees when they begin their employment and pointed out in the manual or handbook for further reference.  Ideally, it should also be mentioned on a periodic basis during staff meetings, by memo, or by email to remind employees of its existence.  Communicating this to employees also acts as a deterrent to inappropriate behavior because it appears that management is concerned and watching.  The procedures for filing a complaint or making a claim also need to be communicated so that all parties know what to do if a situation presents itself.

Some people have even turned to a fraud hotline.  At a very small yearly cost, an outside company will provide an anonymous voice-mail box for all calls.  The outside company dictates the calls and communicates directly with management or the board.  Then the board can decide how to address the issues.  Having a fraud hotline acts as a deterrent to fraud just by being in existence.  It proves to the staff that your management is taking an active role in preventing fraud.  A hotline can be particularly effective when management personnel frequently travel and are not always around to monitor the work environment.  In addition, a hotline can be effective if their are too few management personnel to monitor all employees.  The same general rule applies here too, the communication of the purpose and procedures is vital to the hotline's success.