Question

Do whistle blowers provide a service or disservice to stakeholders of financial statement.

Answer 1

Whistle blowing is the reporting to the appropriate person by a company insider about the actual or suspected fraud or violation of the law within the company. The most important objective of whistle blowing is to enforce ethical conduct in business.

The implementation of whistle blowing policy is an indication that the company follows the highest level of Corporate Governance and believes in transparency and Ethics in business conduct.

A whistle blower is no rebel and his loyalty to the organization should not be questioned. In fact, whistle blowing helps different stakeholders in different ways and provides service to them.

Whistle blowing systems are not just beneficial for internal members or leaders of the organization but they are valuable to different stakeholders and can also be a source or channel to report any misconduct, if found, both internally and externally.

Services or benefits to employees of the organization: Availability of whistle blowing policy in an organization relieves the employees and makes them comfortable in reporting any suspected misconduct prevailing in the organization.

Benefits to an investor: A proper implementation of whistle blowing policy makes an organization more ethical in its conduct of business and helps in protection of funds invested by the investor from any fraud.

Benefits to Managing director or CEO: It is pretty obvious that no management team needs a crisis on their hands. Proper whistle blowing policy helps the managing director or CEO to solve the issue internally and not let it out in public.

Benefits to members of the board: Whistleblowing helps the members of the board with their top priorities, i.e. transparency and good governance. It is a source to insure that everything is being done in order to govern the business.

Benefits to suppliers: An openness to whistle blowing really underlines that the organization wants to hear about unacceptable conduct throughout their entire supply chain.

Benefits to consumers: Due to the presence of whistle blowing policy, there is an opportunity being provided to customers to be heard against any misconduct.