Comment - Thumbs up for whistleblowing

Finance directors are keen to encourage whistleblowing. In a survey for the ‘Big Question’ carried out by Accountancy Age and Reed Accountancy Personnel (4 July 1997, page 3), 90% of respondents said they support the idea of legal protection for an employee who exposed fraud, crime or malpractice at work.

It seems legislation will soon agree with FDs in encouraging whistleblowing.

Last week (11 May), it passed its second reading in the House of Lords of the public interest disclosure bill.

With cross-party support and backing from such august bodies as the Confederation of British Industries, the Trades Union Congress, the Institute of Directors and the English ICA, the bill looks set to become law by early next year. This legal protection is mainly the result of campaigning by the charity Public Concern at Work.

The bill protects workers from being sacked or penalised for disclosing information relating to a variety of situations such as crimes, breaches of legal obligations, miscarriages of justice, dangers to health and safety or the environment.

The key to the public interest disclosure bill is that, to qualify for the protection afforded by the bill, the worker making the disclosure must be acting in good faith throughout and have reasonable grounds for believing the disclosed information indicates a serious problem.

At the same time that the bill is entering the statute books, auditors are examining their own position on whistleblowing. A recent discussion paper looked at appropriate behaviour for auditors who receive whistleblowing disclosures.

It is probably fair to say auditors are cynical about whistleblowers.

True, cases highlighted by the bill’s champions show that official inquiries into scandals of the last few years revealed employees who had recognised the warning signs but were too scared to raise the alarm, or did so to the wrong authority.

But for most auditors who have received such disclosures, it turns out the informant is a disgruntled ex-employee dismissed legitimately and out to wreak a little revenge.

The institute’s discussion paper wants to encourage whistleblowing to the auditor when the employee has failed to receive a satisfactory hearing from his line manager. The problem for the auditor is what to do with the information received and whether, in the pursuit of inquiries, the informant’s anonymity should be compromised.

When the bill becomes law there is a bound to be the shrill sound of whistleblowers taking advantage of the new provisions. Everybody caught up in the new regime – including FDs who professed their support for the move and sceptical auditors – are going to have to take the blasts seriously.

Peter Williams, chartered accountant, is editor of the newsletter Electronic Finance.