OUR THOUGHTS ON:

Internal Auditor Whistleblower Receives $300,000

Risk Advisory/Internal Audit

By Kevin Hoover

As an auditor, it is our job to perform audits to ensure there are controls in place that reduce the risks related to fraud and corruption.  Now imagine as an auditor that you identify an instance of fraud or company wrongdoing, and you appropriately report it to others within your company, as well as your supervisor, yet no action is taken. The SEC recently reported of just such a case:  corporate whistleblower reported information to the SEC related to a fraud after his co-workers took no action to rectify the situation.

In the past, auditors were not eligible to receive awards for “blowing the whistle”; however, thanks to the SEC Whistleblower Program (which was enacted by the Dodd-Frank act on July 21, 2010), eligible whistleblowers are entitled to an award of between 10% and 30% of the monetary sanctions collected in actions brought by the SEC and related actions brought by other regulatory and law enforcement authorities.  In the case noted above, the whistleblower was awarded $300,000 by the SEC, as the sanctions against the company exceeded $1 million, and as the whistleblower notified the SEC within the 120-day limit.

The program requires eligible whistleblowers to voluntarily provide the SEC with original information about a possible violation of the federal securities laws that has occurred, is ongoing or is about to occur.  The information provided must lead to a successful SEC action resulting in an order of monetary sanctions exceeding $1 million. One or more people are allowed to act as a whistleblower, but companies or organizations cannot qualify as whistleblowers. You are not required to be an employee of the company to submit information about that company.

For more information on our internal audit and advisory services, please contact either Kevin Hoover or Jim Yard.

© 2014 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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