Why have a hotline? > Compliance

Compliance


In both the US and Canada there are government regulations that make it mandatory for organizations to have a system in place for employees to report “whistleblower” information. In the US it is the Sarbanes-Oxley Act 2002: Section 301.4 and in Canada it is the Multilateral Instrument 52-110: Part 2.7.

The regulations in both documents state that there must be an avenue for employees to anonymously report any information they find questionable regarding internal fraud, theft or questionable accounting practices. Utilizing ConcernCheck ensures that your organization is fully compliant with these specific portions of both regulating documents.


Canadian Compliance


Following the Enron/WorldCom incident, the Canadian government passed legislation that mandates publicly-traded organizations to implement a “whistleblower system”. This piece of legislation is entitled the Multilateral Instrument 52-110. The section of text relevant to whistle-blowing initiatives is contained in Part 2.3 (7)(a)(b) within “Audit Committee Responsibilities”.

 

“(7) An audit committee shall establish procedures for:

 

(a) the receipt, retention, and treatment of complaints received by the issuer regarding accounting, internal accounting controls, or auditing matters; and
(b) the confidential, anonymous submission by employees of the issuer of concerns regarding questionable accounting or auditing matters.”


The regulations in this white paper mandate a system for employees to anonymously report any activities that appear questionable, such as internal fraud, theft or questionable accounting practices. Employing the ConcernCheck confidential hotline helps organization be fully compliant with this new legislation.

 

 


Compliant and efficient Whistleblower Systems include:

- High availability and accessibility for every employee in your organization
- Complete accounts of any ‘whistle-blower’ information provided

- Anonymity for hotline users

- Secure storage for reports


 


Failure to Comply

Under the Multilateral Instrument 52-110: Part 2 (7) (a) (b) companies who have not complied will be prohibited from being listed on Canadian securities exchanges.

 

Often, companies who have complied with these regulations have received more lenient penalties if it was found that there were instances of internal fraud, theft or questionable accounting practices occurring. Having an avenue for any employee to have raised awareness about the issue provides the company with a safeguard, often reducing their culpability.

 

 


US Compliance


Following the Enron/WorldCom incident, the US government passed legislation that mandates organizations to implement a “whistleblower system”: the Sarbanes-Oxley Act 2002. The section of text relevant to whistle blowing initiatives is contained in Sarbanes-Oxley Act 2002: SEC 301 (4) PUBLIC COMPANY AUDIT COMITTEES.

 

(4) COMPLAINTS.–Each audit committee shall establish procedures for –

 

“(A) the receipt, retention, and treatment of complaints received by the issuer regarding accounting, internal accounting controls, or auditing matters; and

(B) the confidential, anonymous submission by employees of the issuer of concerns regarding questionable accounting or auditing matters.”

 
The measures outlined in the document mandates a system for employees to anonymously report any unethical activities, such as internal fraud, theft or questionable accounting practices. Employing the ConcernCheck confidential hotline helps organizations fully comply with this legislation.

 

 

Compliant Whistleblower Systems include:

- High availability and accessibility for every employee in your organization

- Complete accounts of any ‘whistleblower’ information reported

- Anonymity for hotline users

- Secure storage for reports

 

 

 

Failure to Comply

Any publicly traded company that has not complied with the Sarbanes-Oxley Act 2002: SEC 301 (4) will be prohibited from being listed on any US national securities exchanges or US national securities associations.

 

Often, companies who have complied with these regulations have received more lenient penalties if it was found that there were instances of internal fraud, theft or questionable accounting practices occurring. The existence of an avenue for employees to report unethical behaviour provides the company with a safeguard, often reducing their culpability.  

 

 

 
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