For years, PwC has been of the opinion that real protection of whistleblowers is necessary to introduce transparency in economic life - that is why entrepreneurs with whom this company cooperates are encouraged to introduce special platforms that anonymize reports, ensuring that the whistleblower is protected.
The EU directive protects whistleblowers, and the Polish government will impose penalties on companies that fail to support them. There is less and less time for management boards to convince employees to change their approach to reporting fraud.
Often, it is not the procedures or formal requirements, but rather the necessity to change mentality which can be the biggest challenge for companies in connection with the EU Directive on the protection of whistleblowers. Member States should bring into force the provisions necessary to comply with the Directive by 17 December 2021.
A lot depends on the attitude of the management board. So what if the team will be well trained when managers "hints" that they do not want to hear about any reports of fraud
And the scale of fraud in companies is often extensive. According to the research of the consulting company PwC, as many as 46% of companies have experienced some type of fraud. However, there are certainly more of them because the study only included those cases that were detected. And what kind of dishonesty is the most common? Of course, it depends on the specifics of your business. For manufacturing companies, theft may be a bigger problem, and for service companies - forgery of documentation. In terms of the frequency of events, cases related to the misappropriation of assets are in the lead, but their value is usually not high. On the other hand, financial embezzlement is rare, but when it does happen, it can turn out to be of great value.
It is quite difficult to find information on specific examples of fraud. Mostly because companies that have fallen victim to fraud take great care that information about irregularities does not leak out.
In order to make it easier to detect frauds, an institution of a whistleblower was created, i.e. a person who is informed about them. The whistleblower, according to the provisions of the EU directive, is to be protected against retaliation. Meanwhile, as research shows, it is still difficult for employees to accept that reporting irregularities makes sense.
The Batory Foundation research shows that as many as 29% of respondents are unable to determine how they would behave if they witnessed a crime in the company. For 36%, the main factor that discourages reporting irregularities is the fear of being considered an informer. The respondents also point out that, in their opinion, the application would not be considered anyway, and the guilty would not be punished. On the other hand, the whistleblowers - as it appears from the surveys - could have problems because of this. While the respondents positively assessed the reporting of bribery in the company by a colleague (65%), only 26% would report this fact to their supervisor or other appropriate person.
In Polish law, there are already references to the rights of the whistleblower. It is true that mandatory procedures for reporting fraud in the financial sector and in the Act on counteracting money laundering and terrorist financing have been introduced, but the entry into force of the EU directive will be a real change. Based on this regulation, we can assume that the whistleblower must act in good faith, so the fraud must be real and actual. Otherwise, protection will not be granted to such a person. The directive provides for 3 types of reports: internal (reported within the company), external (when information about the fraud is submitted to an external institution) and public disclosure. The directive stipulates that the fraud should initially be reported internally.
The first training conducted by compliance specialists indicates that employees are reluctant to report irregularities. The biggest problem is the fear of being ostracized in the team or being unfairly treated. As a result, it reduces work efficiency and often necessitates a change of workplace. Fear of losing your job or lowering your salary is another barrier.
The directive provides protection against specific acts of retaliation: - These are repression, demotions of the employee, or withholding of promotions. Sanctions should be imposed on the person committing such actions against the whistleblower. The directive requires the sanctions to be "effective, proportionate and dissuasive". Member States are free to define them.
The whistleblower does not have to be a full-time employee. It can be a person bound by a contract with the company in which the fraud occurs, a volunteer or a person who is just being recruited.
Why should any fraud be reported at all? One of the benefits is the reduction of the company's financial and reputational losses. It is estimated that companies lose about 5% of their annual revenues due to fraud. Market competition also improves as whistleblowers may reduce corruption.
The regulations are to cover public institutions and private companies employing at least 250 employees from December 17, 2021, and from December 17, 2023, private companies employing at least 50 employees.
PwC experts already see a greater interest in consultancy in the field of introducing such solutions in companies. Much is being invested in training and implementing a fraud reporting system. It will also be necessary to prepare appropriate processes and policies in the company.
For years, PwC has been of the opinion that real protection of whistleblowers is necessary to introduce transparency in economic life - that is why entrepreneurs with whom this company cooperates are encouraged to introduce special platforms that anonymize reports, ensuring that the whistleblower is protected.
Adapting to the requirements of European law requires a lot of work for entrepreneurs. First of all, it is necessary to train the team not to be afraid to talk about the irregularities noticed and to convince employees that they will not be subject to retaliation for such action.
Article from Business Insider
Contact us
