Not-for-Profits, Are you fully utilizing feedback from your employees?

Not-for-Profits, Are you fully utilizing feedback from your employees?

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Consider the following startling statistics: A typical organization loses 5% of its annual revenue to fraud.  Small organizations are disproportionately victimized by occupational fraud. These frauds are much more than likely to be detected by tip than any other means.[i]

Take these statistics and couple them with the scrutiny that the Internal Revenue Service has placed on this important governance item. The IRS now asks exempt organizations in Form 990 “Did the organization have a written whistleblower policy?”[ii]

While having a written whistleblower policy is a good beginning for your organization, how easy is it for your employees to report a suspected wrongdoing? How about a suggestion for improvement or reporting a perceived safety hazard? Anecdotally, employees are more readily willing to report such an item if it were to be anonymous, regardless of how much of an open door policy is already in place with an organization. As a result, have you considered instituting a hotline for reporting?

A reporting hotline is typically used for the following purposes, but can be tailored to meet your own specific needs:

  • Fraud, waste and abuse
  • Safety issues
  • Quality control issues
  • Human resources tips
  • Process improvement
  • “Nuisance” tips and general complaints

Instituting the hotline alone is a good start, but there is much more that needs to happen in conjunction with its implementation. Advertise the existence of the hotline on a periodic basis (like posters in break rooms, notes included in payroll stubs, free hand-outs). Ensure the program is embraced by management.  Communicate its success to your employees. Reward those who come forward with tips.  Prevent any retribution against those that report items.

The rewards of a hotline can help an organization, if you are willing to fully utilize your employees.

[i] From the 2010 Report to the Nation on Occupational Fraud and Abuse by the Association of Certified Fraud Examiners

[ii] IRS Form 990, Part VI, Section B, Item 13

About the Author

Keiter CPAs is a certified public accounting firm serving the audittax, accounting and consulting needs of businesses and their owners located in Richmond and across Virginia. We focus on serving emerging growth businesses and companies in the financial servicesconstructionreal estatemanufacturingretail & distribution industries and nonprofits. We also provide business valuations and forensic accounting servicesfamily office services, and inbound international services.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


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