Whistleblowing is when an individual raises a concern about a danger, risk, malpractice or wrong doing within an organisation. The concern may be raised internally or externally.
The UK Financial Reporting Council (FRC) published the UK Corporate Governance Code, for listed companies in September 2012. This includes a provision on whistleblowing.
"The audit committee should review arrangements by which staff of the company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The audit committee's objective should be to ensure that arrangements are in place for the proportionate and independent investigation of such matters and for appropriate follow-up action."
The ICAEW published its ‘Guidance for Audit Committees: Whistleblowing arrangements,’ in March 2004. This guidance was written when the Combined Code of Corporate Governance was in force. As its replacement, the UK Corporate Governance Code, imposes the same responsibility on the audit committee with regard to the whistleblowing arrangements in place in a listed company, we continue to commend this material as it provides useful and accessible guidance on whistleblowing procedures for audit committees and non-executive directors.
An individual in an organisation who is thinking about "blowing the whistle" will need to consider, amongst other things, how best to raise the concern in the public interest so that it will be properly addressed, while at the same time minimising any potential risk to himself.
In general, an individual in an organisation should discuss the matter internally first, using all appropriate channels, and then resort to going outside the organisation.
If you are concerned about possible misconduct, you might find the following considerations helpful in deciding how to proceed:
Public Concern at Work (PCAW) is a charity concerned with whistleblowing issues. Their helpline +44 (0)20 7404 6609 and email firstname.lastname@example.org offers free and confidential advice to anyone about misconduct at work who is not sure whether or how to raise their concerns. PCAW aims to help enquirers to identify how best to raise the concern while minimising any risk to the whistleblower and maximising the chances for the misconduct to be properly addressed.
You may want to seek legal advice on your position. The Law Society website is helpful in drawing up a shortlist of appropriate firms.
Whistleblowing informs those who need to know about dangerous or illegal activities that affects others and gives them an opportunity to address the issue. Therefore, whistleblowing protects individuals and sometimes saves lives.
Setting up formal whistleblowing procedures within an organisation strengthens corporate governance and ethics in the organisation as well as being a useful risk management tool.
Whistleblowing procedures in an organisation encourages individuals to disclose concerns using appropriate channels before these concerns become a serious problem, damaging an organisation's reputation through negative publicity, regulatory investigation, fines and/or compensation.
Accountants in business or practice may have statutory or contractual obligations to report to a regulator or other third party or to SOCA under the Anti-Money Laundering requirements. They may also whistle-blow to a third party where it would be in the public interest to do so, even they have no legal obligation to do so. This right is discussed in the Guidance Statement Professional conduct in relation to defaults or unlawful acts.
The Public Interest Disclosure Act 1998 was introduced to protect individuals making disclosures in the public interest and to allow such individuals to claim compensation for victimisation following such disclosure.
Guidance issued by ICAEW in May 2014. This replaces TECH 16/99 Receipt of Information in Confidence by Auditors which has been withdrawn.
The government believes that more should be done to encourage and protect whistleblowers and in July 2013 asked for submissions from interested parties to see how the law could be strengthened to provide more protection and encouragement. In June 2014 BIS published its response. BIS made a series of recommendations but the only legislative change that it proposed was that prescribed persons should produce an annual report on disclosures received. This is to be enacted via the Small Business, Enterprise and Employment Bill. Student nurses were also added to the list of workers protected under the legislation.