ASA Whistleblowing Policy Report

Question: Discuss about the ASA Whistleblowing Policy Report. Answer: Introduction Corporate wrong doings are on the rise and can go undetected in organizations leading to great losses. Executives and experts commit malpractices using concealed methods making it difficult to reach the public and other stakeholders. Top organizations and independent associations are moving to curb wrong deeds by adopting whistleblowing policies (Rad, 2010). This development is from the understanding that some people in organizations suspect or hold information about scandals but choose to remain silent to avoid retaliatory consequences from culprits. An effective system is necessary to encourage and protect whistleblowers, who stand high risks for reporting corrupt officials. Australian Shareholders Association (ASA) considers adoption of a whistleblowing policy to benefit the members. This report gives recommendations for the best-practice contemporary whistleblowing policies for installing in the companies listed in Australian Stock Exchange (ASE). ASAs Background ASA is an independent, not-for-profit association that purposes to monitor the ASE-listed corporations to ensure the rights of shareholders are not violated. The body seeks to ensure firms uphold values of accountability, transparency, and corporate governance concerning executive remuneration, company performance, dividend management, and risk management (Kinsky, 2013). ASAs advocacy activities include representation of the shareholders in direct engagements with companies board and management teams. Additionally, ASA conducts research on behalf of members for financial reports, corporate disclosures, and equity offers (ASA, 2016). Also, ASA offers education programs for members on investments during meetings. Further, ASA represents the interest of members in committees and industry forums. Role of Whistleblowers Whistleblowing is the disclosure of information in the interest of the public, mainly to bring to bad light conducts such as conducts associated with the risk of injury, improper management of public resources and corruption. Whistleblowers enjoy the protection under the law governing civil and criminal liability. They are protected from dismissal and breach of confidentiality. Whistleblowers is vital components on corporate functions. Where an effective whistleblowing system is functional, organizations overcome the culture of silence that encourages vices of some officials. Whistleblowers enable organizations to deter malpractices, identify problems in early stages, and pass critical information to important people to take timely action (Sergeant, 2013). Moreover, whistleblowers help minimize dangers of malicious or anonymous leaks, reduce compensation costs due to executive violations, and uphold the reputation of an organization. Accomplishing these operational performances enhan ces public confidence that attracts investors. Risks of Lacking a Whistleblowers Policy Organizations that do not adopt whistleblowing policy are highly vulnerable to scandalous activities besides endangering investments. Companies can experience risks of fraud, corruption, bribery, gross violations by executives, and revenue losses (OECD, 2009). Businesses can also suffer from the poor public confidence that scares investors away. Moreover, the occurrence of above risks can lead lawsuits and huge compensation requirements. Other risks include misappropriation of resources and conflicts of interest from executives. In extreme cases, the organizations can fail and close down as a consequence of embezzlement of money. The most common risk is accounting fraud. Accounting Fraud Accounting fraud is the deliberate falsification of financial statements or systems to conceal poor business performances, financial misappropriations, and other monetary violations (Das 2013). Fraud activities can involve individual officers or group of employees and other business partners. Primarily, employees commit fraud for illegal personal benefits. In some incidences, executives commit fraud to create a favorable perception of an organization that ultimately yields unauthorized personal gains. Effects of Fraud on Stakeholders Fraud has far-reaching consequences for different stakeholders. Owners and shareholders experience financial losses due to low or no profits and dividends. Fraud reduces net profits that are a form of returns on capital, which is the source of income for shareholders. Extreme fraud leads to business failure and loss of invested funds (OECD 2009). Overvaluation of the companys assets and performances leads to false information for potential investors that entices them to provide funds. As a result, they invest in less profitable businesses only to reap losses or little returns. The suppliers can suffer from bad debts when the company fails due to fraud. Customers lose huge amounts of money where fraudulent systems are used. Buyers end up paying more money where officers alter financial systems to charge high prices or hidden costs. Innocent employees can be wrongfully accused of fraud leading to loss of a job or heavy penalties (Roberst, Olsen, Brown 2009). Alternatively, workers who suspect fraud activities can receive threats from culprits. Fraud also leads to losses to the government as organizations evade or avoid taxation due to false profit figures. ASA can help minimize fraud and other scandals among the Australia-based public companies by adopting whistleblowing recommendations below. Recommendations Full Whistleblowers Protection Protection plays an important role in promoting whistleblowing. People suspecting wrong deeds are afraid to report due to fear of being exposed to the culprits who may retaliate in the worst ways including death (Devine Walden 2013). ASA should embrace a system that ensures whistleblowers are fully protected by continually reviewing the reporting as well as prosecution procedures and correcting the loopholes. Utmost protection is desirable to create a culture that supports courageous whistleblowing. Inadequate protection is the major cause of profound revelations of corporate scandals. Management and prosecution units should observe cautious disclosure conceal the whistleblowers along with their family members. Confidentiality of Reporting Systems Australian organizations would adopt reporting systems that attain confidentiality and anonymous whistleblowing. Although full legal protection can be installed, people in organizations can fail to report scandals (Latimer Brown 2008). ASA should encourage reporting by pushing for adoption of systems that conceal the identity of whistleblowers within or without an organization. The investigation and prosecution units should handle reported scandals without involving anonymous whistleblowers. Confidential reporting systems include the use of advanced computer technologies and entirely independent organizations. Stringent Whistleblowing Laws The laws governing the whistleblowing activities are inadequate and require reviews to provide an effective way of handling all issues (Sergeant 2013). Supporting formulation of new laws helps avoid weaknesses that hinder complete utilization of whistleblowing capabilities to curb organizational malpractices. Additionally, technological advancements and creativity have led to loosely controlled whistleblowing practices. New laws and continuous reviews are necessary to ensure resilient legal framework to address emerging issues. Statement of Whistleblowers Support A statement that supports favorable environment is critical to inspiring employees to practice whistleblowing (Alberta 2013). Units, where employees can seek advice or disclose wrongdoings, motivate more workers to commit in reporting suspicious behaviors of colleagues or bosses. Without strong support, the employees feel frightened and resort to keep silence. The statements also need to protect reporters from reprisal. Repeated supportive message creates a clear stance that promotes whistleblowing. Conclusion The Australian listed companies are exposed to significant financial scandals from the employees and executives. ASA can spearhead changes to protect members and stakeholders from losses. Lobbying for the adoption of best practices of whistleblowing policies among the organizations would contribute to reduced fraud activities. It is important to minimize vices such as accounting fraud that affect many groups including owners, shareholders, and customers, among others. Recommendable practices include formulating new laws, supporting workers, ensuring full protection, and confidential technological reporting system. Adopting these changes would enhance protection of shareholders and achieve ASAs objectives. Reference List Alberta S. (2013). Best Practices for Key Elements of a Whistleblower Policy and Procedure. Alberta Policy and Governance. ASA. (2016). What We Do: Advocacy. Available at https://www.australianshareholders.com.au/advocacy [Accessed 2 Sep. 2016] Das SC. (2013). Corporate governance. [Place of publication not identified], Prentice-Hall Of India. Devine T Walden S. (2013). International best practices for whistleblower policies. Government Accountability Project. Kinsky R. (2013). Online investing on the Australian sharemarket. Milton, Qld, Wrightbooks, A Wiley Brand. Latimer P Brown AJ. 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