The most recent Report to the Nations on Occupational Fraud and Abuse by the Association of Certified Fraud Examiners (ACFE) reported a median loss due to fraud of $145,000 per victim, with more than 20% of victims losing at least $1,000,000. The result of these findings is a concerted effort on the part of Frost, PLLC to educate and train their employees and clients on fraud prevention, detection, and proactive reporting.
Frost, PLLC’s new service is about protecting organizations, their people, and minimizing financial losses. There is growing concern over the potential damage to companies and organizations due to losses from unethical behavior.
Red Flag Reporting is your hotline for:
- Fraudulent activity/theft
- Safety violations
- Unethical behavior
Employees can report on safety violations, sexual harassment, drug and alcohol use, intimidation, favoritism, and other activities that can harm employees.
Suspicious activity, theft, bribery, and more can be reported so that management can stop the loss before it goes any further.
FAMILY AND FRIENDS
In a care facility, such as a hospital or nursing home, family and friends of residents or patients can submit reports related to the care and protection of their loved ones
EMPLOYEES AND OTHER
Employees, vendors, contractors, and others in a care facility can submit reports related to the care and protection of the residents or patients.
What Do The Experts Say?
In terms of statistics related to employee fraud, perhaps no organization is more respected than the Association of Certified Fraud Examiners.
Here are a few observations about hotlines that they noted:
- Frauds are much more likely to be detected by tips than by any other method.
- Fraud reporting mechanisms, such as hotlines, should be set up to receive tips from both internal and external sources and should allow anonymity and confidentiality.
- Tools such as anonymous hotlines or web-based portals, which allow individuals to report misconduct without fear of retaliation or of being identified, can help.
- Not surprisingly, organizations with some form of hotline in place saw a much higher likelihood that a fraud would be detected by a tip (51%) than organizations without such a hotline (33%).
- The presence of formal management reviews, employee support programs and hotlines were correlated with the greatest decreases in financial losses.
- Frauds were typically caught 50% more quickly when a hotline was in place.
- Losses due to each fraud incident are reduced by an average of 41% when a hotline is in place.
- 10% of frauds in organizations without hotlines were caught by accident, whereas 4% of cases were detected by accident in organizations that had implemented a hotline.
- External audit was the detection method for 5% of cases from organizations without hotlines, but only 1% in organizations with hotlines.
- Organizations with hotlines had a larger percentage of frauds reported by tip than in organizations without hotlines.
Red Flag Reporting was created to educate and empower employees with the tools to detect and report unethical behavior. Because tips and complaints are proven to be the number one method of fraud protection (2014 ACFE Report to the Nations on Occupational Fraud and Abuse), the anonymity that hotlines like Red Flag Reporting provides has been shown to make employees feel both protected and alleviated from burden. By adding a new service to our portfolio, Frost, PLLC is now in a unique position to build value and protect our clients.
Our service protects the assets, employees and reputations of our clients, while dramatically reducing the costly consequences of unethical activity in the workplace. We provide the most cost effective internal control an organization can have (an ethics hotline), empower the most successful mechanism for catching unethical behavior (open channels of communication) and support the most powerful tool for deterring bad actions (a strong tone at the top). Our service is so affordable that statistics bare that simply receiving one report can pay for our service for decades.
Red Flag Reporting’s mission is to protect organizations and their people from damages caused by financial fraud and employee misconduct. Developed by experienced fraud investigators and human resources consultants, Red Flag Reporting is a highly effective program to detect and stop costly problems such as embezzlement, false billing, misuse of appropriations and accounting irregularities. The program also addresses employee protection, raising red flags before a work condition leads to a litigious situation.
Red Flag Reporting Overview (3 minutes)
Red Flag Reporting Fraud Awareness Overview (18 minutes)
You can create an ethical and positive workplace environment with strong internal controls, and a strong oversight process utilizing external experts. Having a hotline in place allows for employers to address a situation early rather than letting it continue and end in the courts. A hotline also eliminates the employee excuse that they had nowhere to turn.
For more information regarding this system or its implementation, contact T. J. Boyle at: firstname.lastname@example.org or 501-975-0267.