Conveyed through the actions of management and the

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Statistics for Business & Economics, Revised
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Chapter 18 / Exercise 30
Statistics for Business & Economics, Revised
Anderson
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conveyed through the actions of management and the board, both internally and externally, but also through policies such as a code of ethics. Employees and board members come from different backgrounds and will often have different definitions of what is ethical behavior. A code of ethics establishes a common framework for employees, management and the board to make decisions when interacting with donors, grantors, vendors and the media by defining what ethical behavior is in the organization. Furthermore, it can reduce subjective or inconsistent management decisions, which saves time, money and potential adverse results from an unethical decision. When preparing the organization’s code of ethics management should: Define what ethical behavior means at the organization and should provide specific examples of unacceptable behavior. Convey the significance of the policy by requiring all employees and board members to sign a copy of the policy upon hire or appointment to the board. Periodically review the policy for relevance and changes in current laws or norms of the organization.
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Statistics for Business & Economics, Revised
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Chapter 18 / Exercise 30
Statistics for Business & Economics, Revised
Anderson
Expert Verified
Whistleblower Policy The 2014 Report to the Nations Global Fraud Study- published by The Association of Certified Fraud Examiners noted that tips are the most common way of discovering fraud. The report also noted that, by adding a fraud hotline, an organization can increase the number of frauds detected and, on average, cut the cost of fraud by 41% and the time to detection by 50%. Establishing a whistleblower policy can make a big difference to the organization’s reputation and bottom line. When preparing the organization’s whistleblower policy, management should: Clearly state that fraudulent activity is not tolerated by the organization and it is the responsibility of all employees to report violations or suspected violations. Include a “no retaliation” section, noting that retaliation will not be tolerated in any form and if it does occur it will be promptly investigated. The Occupational Safety and Health (OSH) Act passed in 1970 protects workers from retaliation under 22 federal laws. Provide a hierarchy for reporting issues internally, including options for when the person in question is the person that would typically receive the complaint. In this situation the policy may direct the employee to contact someone on the board. Reference the organization’s code of ethics policy. This policy often requires the board, management and employees of the organization to observe high standards for business and personal ethics. Consider including a whistleblower hotline, which provides additional anonymity and has been shown to make employees more likely to report potential or actual wrongdoing. Illustrate examples of what is considered fraud and would therefore be reported through this process versus another type of complaint that should be resolved through other outlets. These examples will help direct employees to appropriate outlets and will reduce the costs of investigating items that are not fraud.

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