“Employees are aware of their executives’ and/or board of directors’ actions, and influenced positively by those who ‘walk the walk and talk the talk,’” is a chief finding in Breaking the Cycle of Fraud: What Senior Financial Executives Should Do, the FERF/RRD white paper published earlier this month. “Executives who establish a strong ethical tone and culture set the stage for the ethical behavior of their employees.”
Among the findings in the report is that ethics training programs need to be presented annually-- at a minimum-- and that these programs work best when conducted through “live,” in-person training sessions.
Whistleblower programs are another important step for countering fraud. The FERF/RRD white paper finds that whistleblower programs should outline clear steps for employees who are reporting their suspicions. In addition, effective whistleblower programs assure employees throughout the year that there will be no retaliation for bringing questionable behaviors or activities to light.
Ethics Training, Whistleblower Programs
Accompanying the white paper was a survey conducted by FERF of 79 individuals at various levels of financial management. The survey found that 53% of organizations had ethics training programs in place. Of those with programs, 89% believe that their training programs are effective.
In addition, 83% of respondents with ethics training programs indicated their programs include a discussion of internal controls. Forty percent are required to comply with SOX Section 404 and have adopted the 2013 COSO Framework.
Finally, 63% of organizations responding to the survey said that they had a whistleblower program in place. More than half (56%) believed that their companies’ whistleblower programs did enough to protect employees from retaliation.
John Truzzolino is a managing director of business development at RR Donnelley.
For the complete survey, please visit this site.
Please join experts from RR Donnelley and the Financial Executive Research Foundation (FERF) to review two important thought leadership pieces for an hour webcast on Tuesday April 21, 2015 2 p.m. Eastern Time entitled Breaking the Cycle of Fraud register here today.