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#495580 - 02/08/06 09:11 PM Internal Fraud/Unethical Behavior
Brandywine Offline
Member
Joined: Jun 2005
Posts: 86
Kentucky
Does anyone out there have any suggestions for how employees are to report fraud or unethical behavior by one member of management to other members of management? Any policies or procedures would be helpful or suggestions on where to go to look for them. I have searched BOL and other sites with no luck thus far.

Any help would be appreciated. Thanks

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Human Resources
#495581 - 02/08/06 09:25 PM Re: Internal Fraud/Unethical Behavior
Jokerman Offline
10K Club
Joined: Nov 2003
Posts: 12,846
They ought to be able to report it to the audit committee or someone that reports to the audit committee.

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#495582 - 02/08/06 09:30 PM Re: Internal Fraud/Unethical Behavior
RBanker Offline
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RBanker
Joined: Jul 2003
Posts: 2,675
Austin Texas
If you're a publicly traded company, there should be a whistleblower hotline set up.
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#495583 - 02/08/06 09:44 PM Re: Internal Fraud/Unethical Behavior
Brandywine Offline
Member
Joined: Jun 2005
Posts: 86
Kentucky
We are not publicly traded and not subject to any of the new guidelines for employee hotlines. However, our external auditors have suggested we have a "method" in place for dealing with these issues if they were to arise.

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#495584 - 02/08/06 09:52 PM Re: Internal Fraud/Unethical Behavior
RBanker Offline
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RBanker
Joined: Jul 2003
Posts: 2,675
Austin Texas
Send an anonymous letter to a member of the audit committee then is my best suggestion.
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#495585 - 02/08/06 10:00 PM Re: Internal Fraud/Unethical Behavior
Banking Bard Offline
100 Club
Joined: Jul 2005
Posts: 191
Kentucky
Are you asking this because you have something to report, or because you want to follow your external auditors' suggestions and get something in place? I think clarifying this might help you get the response you're looking for.

Most of the responses seem to assume the former, but your second post makes me think that maybe you're looking for advice/opinions on what other banks have and how to implement.
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#495586 - 02/08/06 10:15 PM Re: Internal Fraud/Unethical Behavior
Lestie G Offline

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Joined: May 2002
Posts: 3,607
Near the Land of Enchantment
We set up a hotline before we were a public company. The cost was minimal, and the benefit has been great. They handle all the admin stuff for you! You choose who receives the notification when there's a call (our Audit Committee Chair is who we chose), and you determine how the investigations and reporting will work. The company we used even provided some sample policies and procedures.
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#495587 - 02/09/06 03:15 PM Re: Internal Fraud/Unethical Behavior
Brandywine Offline
Member
Joined: Jun 2005
Posts: 86
Kentucky
Banking Bard....
You are right, as I am only looking for advice/opinions on what other banks do and how to implement in order to satisfy questions from auditors.

However, I would be willing to assume that management will not set up a hotline, as we are a very small institution with only one main branch.

I like the idea of an anonymous letter to a member of the audit committee.....any other suggestions?

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#495588 - 02/09/06 03:42 PM Re: Internal Fraud/Unethical Behavior
A_G Offline
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Joined: Jul 2004
Posts: 18,962
Quote:

The cost was minimal, and the benefit has been great.




May I ask you to define a range for 'minimal?'
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#495589 - 02/09/06 03:55 PM Re: Internal Fraud/Unethical Behavior
Neytiri Offline
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Neytiri
Joined: Jul 2002
Posts: 645
Pandora
Our whistleblower policy says for our our employees to send an anonymous note to the IA, e-mail the IA, or send an anonymous letter to the Chairman of the Audit Committee and gave his address (with his permission). Doesn't have to be a fancy & costly system - just have procedures for reporting to someone that has the power to investigate. That is why we chose IA and the Audit Chairman. When there is something reported, we have guidelines as to how to investigate, who to report the results of the investigation, etc.

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#495590 - 02/09/06 04:38 PM Re: Internal Fraud/Unethical Behavior
Lestie G Offline

Power Poster
Joined: May 2002
Posts: 3,607
Near the Land of Enchantment
Quote:

Quote:

The cost was minimal, and the benefit has been great.




May I ask you to define a range for 'minimal?'




Less than $100 per month.
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Opinions my own.

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#495591 - 02/09/06 06:26 PM Re: Internal Fraud/Unethical Behavior
Skyline Offline
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Skyline
Joined: Sep 2005
Posts: 589
A simple statement on the bank's internal web site or some other bulletin board: The bank's audit committee works closely with our CPAs. As an employee of XYZ, you may anonymously report any fraud concerns or other financial-related concerns to (the Audit Committee Chairman, listing name and contact info) without fear of repercussions.
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#495592 - 02/10/06 05:07 PM Re: Internal Fraud/Unethical Behavior
TDM Offline
Member
Joined: Nov 2005
Posts: 82
I once heard Dave Dickinson refer to a situation like this thusly:

"You have a party and don't invite them."

Not sure if that helps, but I always kind of liked thinking of it in terms like that!

I guess one other solution I've heard of, which would be most viable for a bank like ours (which means small) is that you could have an agreement set up with your external auditors that your employees may call them if they wish to report any suspicious insider incidents.

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#495593 - 02/14/06 09:37 PM Re: Internal Fraud/Unethical Behavior
GenerousLife Offline
Diamond Poster
Joined: Feb 2002
Posts: 1,466
USA
We implemented a Whistleblower Policy, even though we do not fall under SOX.

Employees are to report improper activities to the Audit Committee of the Board. The bank's internal auditor is the designated person to receive and research any such reports, with the Chairman of the Audit Committee acting as alternate.

Procedures include a confidentiality commitment, a time period for investigation and a non-retaliation statement.
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#495594 - 02/16/06 09:24 PM Re: Internal Fraud/Unethical Behavior
JC Offline
New Poster
Joined: Apr 2003
Posts: 11
My bank is publicly traded, but small - 65 employees. Our audit committee chairman agreed to be the contact point for employees wanting to report improper activities. He provided us his po box info. Then we informed the employees of the procedure, and wrote a short policy that is included in the Employee Handbook.

The Audit Committee meets quarterly and we always include review of this as an agenda item, so that any complaints would be documented. So far none have been received.

If you would like a copy of the policy, send me a pm with your e-mail info.

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#495595 - 03/03/06 09:22 PM Re: Internal Fraud/Unethical Behavior
mwhitaker Offline
Junior Member
Joined: Feb 2004
Posts: 45
Texas
We recently rented a post office box (separate from the bank's main post office box) strictly for this purpose. Those with access to the box include both of our internal auditors and the chairperson of the audit committee.

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#495596 - 03/03/06 09:26 PM Re: Internal Fraud/Unethical Behavior
mwhitaker Offline
Junior Member
Joined: Feb 2004
Posts: 45
Texas
we also include this as an agenda item at our monthly audit committee meetings (even if no items were received)...and document in the minutes. No complaints so far here either.

We have a whistleblower policy and procedures are included in the employee handbook.

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#495597 - 03/07/06 07:08 PM Re: Internal Fraud/Unethical Behavior
Kansayaku Offline
Diamond Poster
Joined: Jan 2003
Posts: 1,454
metsuretsu
I always told everyone at the bank I worked at (as IA) that if they had a concern and didn't want to be tied to it, they knew where my inbox was on my desk as well as other ways to get information to me and they were always welcome to leave unsigned and typed notes to report anything of concern. It seemed to work well for me.
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#495598 - 03/25/06 07:53 PM Re: Internal Fraud/Unethical Behavior
Blade Scrapper Offline
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Blade Scrapper
Joined: Aug 2004
Posts: 5,912
Outside A Garage
Wouldn't BSA requirements also mandate SAR reporting?
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