Fraud Awareness: Whistleblower Process & Resources
As Fraud Week continues, Fact Finder Forensics is highlighting the importance of whistleblowers and the process of whistleblowing. Whistleblowers are champions in the fight against fraud and they are imperative to safeguarding businesses from the growing fraud problem.
Many employees will observe fraud, wrongdoing, or misconduct at their workplace. Individuals should never feel pressured to cover up illegal acts, stay quiet, and not report misconduct out of fear. From everyday workers to upper management, the majority of people will come forward to report fraud and expose unlawful conduct.
Whistleblowing is a legally protected act, in which employer retaliation is prohibited in addition to adverse employment actions caused by whistleblowing. The decision to become a whistleblower is not an easy one. Often these individuals love their jobs and do not want to cause harm to their company. However, unscrupulous companies are counting on this.
If you suspect of wrongdoing or know of fraud being committed by your employer, fellow employee, or another entity—you can take steps to stop it. Learn what you can do with that information and help fight fraud.
Who Can Be a Whistleblower?
Becoming a whistleblower is one way for authorities to become aware of practices that violate the law, cheat investors, steal taxpayer funds, and more. Anyone with specific, detailed information about fraudulent activity can become a whistleblower, qualify for protection, and in some instances, receive rewards. Whistleblowers are usually employees of the organization that is violating the law. However whistleblowers can be anyone with concrete evidence of wrongdoing.
To become a whistleblower, you will need specific, detailed information and to file a claim with the program that protects against the specific type of fraud you are reporting. The most commonly filed government programs for fraud include: the False Claims Act (FCA), the SEC Whistleblower Program, and the IRS Whistleblower Program.
The statue of limitations, procedure, and protections vary depending on the program you are planning to file under. Whistleblower cases will follow a general timeline: a complaint is filed, an investigation takes place, cases are brought to trial, and resolutions and settlements are reached.
False Claims Act (FCA)
The False Claims Act, also known as the “Lincoln Law,” is a whistleblower law that allows citizens to sue companies or individuals that are defrauding the government. It makes it illegal for anyone to make false claims to receive benefits or funds from the government through a federally-funded program. The FCA provides financial rewards for whistleblowers as well as job protection against retaliation. However, it requires that whistleblowers use lawyers to file these qui tam lawsuits. Violations that can be reported include:
- Creating a false statement to get a claim paid
- Presenting a false claim for payment
- Reverse false claims
- Reducing amount of the money owed to government
- failing to return an overpayment
SEC Whistleblower Program
The SEC Whistleblower Program provides incentives to individuals who report violations in U.S. financial markets and businesses. This could include accounting fraud, securities fraud, consumer fraud, and more. The program allows individuals to submit information anonymously. However, it requires whistleblowers to obtain counsel, who will submit the information anonymously on the whistleblower’s behalf.
Find more resources on the program at https://www.sec.gov/whistleblower/resources
IRS Whistleblower Program
IRS Whistleblower Program provides rewards and protections to individuals who report and provide information about tax fraud or tax underpayments by their employers or other. The IRS keeps the identities of tax whistleblowers confidential with certain limitations.
Find more resources on the program at https://www.irs.gov/compliance/whistleblower-office#moreinfo
Fraud Hotlines & Other Reporting Options
According to the ACFE’s Occupational Fraud 2022 Report to the Nations, tips are the most common way frauds are detected. Having an anonymous email or phone hotline has been found to allow for even more tips. In fact, 47% of frauds at companies were detected through an anonymous fraud reporting mechanism like a hotline. If a hotline isn’t available to you, try:
- Writing an anonymous letter to your organization’s internal audit team or anti-fraud team, if applicable.
- Anonymously reporting it to the board of directors or the board’s audit committee, if applicable.
- Or directly submitting a tip at the whistleblower program that is relevant to your information.
Every employee, regardless of position, can help prevent fraud. While a majority of employees and employers are honest, if you observe something that isn’t right, it may be necessary to take action.
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