Association of Local Government Auditors

I still remember the day I was catapulted into the whistleblowing business.  It started with an innocuous request by my boss, Jeff Griffiths, City of Toronto Auditor General, to write a report on setting up a Fraud and Waste Hotline.  Following a six-month pilot project, in 2002 we established the first municipal Fraud & Waste Hotline Program in Canada.

Toronto's Hotline was set up as a practical tool for employees and the public to report complaints, anonymously if preferred, concerning fraud, waste or wrongdoing that impacts City resources.

In 2005, the Auditor General established a Forensic Unit dedicated to the operation of the Hotline Program.  The Unit manages the program internally (instead of through a third party vendor who intakes initial complaints and then forwards them to an audit shop for attention).

Since the Hotline's implementation, the Auditor General's Office has provided advice to a number of Canadian and U.S. government organizations that have introduced or are contemplating similar programs.  We also respond to on-going questions concerning hotlines and related issues from ALGA members, some of which are reproduced below:

1. How many whistleblower complaints does your program receive in a year?

The Auditor General reports annually on the activities of the Hotline program through Audit Committee to City Council.

A copy of the Toronto Auditor General's 2010 Annual Report - Fraud and Waste Hotline is available at http://www.toronto.ca/audit/2011/fraudwaste-jan18.pdf .  The report is quite detailed and provides an overview of our process, statistics, as well as a summary of certain investigations conducted.

In 2010, the Auditor General's Office received 573 complaints.  Over 56% included at least two or more allegations.  In terms of actual complaints, the office handles over 1000 allegations on an annual basis.

2. What factors determine whether a complaint will be referred to a department for investigation versus being investigated by whistleblower program staff?

The decision to refer a complaint to a division for review or investigation is based on professional judgement taking into consideration the nature of allegations, expertise of divisional staff to investigate, timing and available staff resources.

If divisional management takes the lead role in an investigation, the Auditor General's Office may provide advice and may participate in conducting part of the investigative work, such as interviews.

Divisional management is required to report back to the Auditor General's Office on complaints referred to them for review or investigation.  Divisional action and investigative findings are reviewed in detail by the Auditor General's Office.  Based on this review, a determination is made as to the adequacy of the information provided and whether additional action is required prior to the Auditor General's Office closing the complaint.  This process can be time consuming, but there is a significant associated value.

3. How many employees are assigned to your whistleblower program?

In July 2005, the Forensic Unit, a separate unit within the Auditor General's Office was established.  Under the direction of the Auditor General, the unit is responsible for the operation of the City's Fraud and Waste Hotline Program and for conducting or coordinating investigations directed at the detection of fraud, waste and wrongdoing involving City resources.

Our staff complement includes:

• 1 Director
• 2 Senior Investigators
• 1 Audit Manager (various responsibilities including overseeing complaint tracking, preliminary enquiries, complaint resolution, research etc.)
• 1 Auditor (intake and complaint resolution through preliminary enquiries)
• ½ Admin

*We also leverage resources from the A-G's Audit staff, if required.

4. Has your organization issued a formal Fraud policy?

Fraud Prevention Policy - established formal responsibility to report wrongdoing http://www.toronto.ca/audit/fraud_hot.htm

Another important Human Resources Policy is:

Conflict of Interest Policy with Supplementary Guidelines Regarding Receiving Fees or Gifts and Reporting Requirements http://www.toronto.ca/calldocuments/conflict_of_interest_policy.htm

5. Have you done ethics training for employees?

The Auditor General's Office is independent from Management and does not provide training to employees.  The City Manager's Office has rolled out training entitled "Mission, Values and Ethics of the Toronto Public Service".

One lesson learned from a recent retribution complaint we dealt with is that any ethics training should also include guidance on what constitutes retribution and the importance of protecting employees that report wrongdoing.  In our 2010 annual Hotline report, the Auditor General made a recommendation that ethics training to employees include training on whistleblower retribution.

The need to tailor ethics training for individuals and various target groups and the difficulties that may be encountered when rolling out such training is discussed in the following article: http://ethicsline.com/pdf/tailoring-ethics-and-compliance-training-for-individuals-johnson.pdf

6. Do you formally evaluate the impact and effectiveness of the tip line?  If so, what do you focus on?

Data collection, monitoring and analysis are important when it comes to measuring the effectiveness of our Hotline.  We rely on hotline metrics or statistics to identify areas of concern within the City and trends, for example, internal control weaknesses, conflict of interest, retribution etc.  As well, we rely on metrics to make action oriented recommendations to management that have resulted in, for example, ethics training being rolled out to City employees.

The accomplishments of the Hotline program including statistical activity are set out in our annual Hotline report (discussed in item 1 above).

However, the issue of estimated savings associated with complaints investigated by the A-G's staff (as opposed to those investigated by or coordinated with Divisional management) is dealt with in the Auditor General's annual Benefits reports.

See the link to the 2010 Benefits reports - Table 3 - "Estimated Savings from Audit Reports Where Savings are Quantifiable": http://www.toronto.ca/audit/2011/citybenefits-jan24.pdf.

It is also important to recognize the non-quantifiable benefits that can result in savings by preventing and detecting wrongdoing, for example:

• The resolution of complaints leads to improvements relating to internal controls, policies and procedures and mitigates potential misuse of City resources.
• The Hotline Program allows employees and the public to report, complaints anonymously.  This encourages the reporting of wrongdoing to help detect and stop further losses to the City.
• The Hotline Program is a key component in deterring fraud or wrongdoing by increasing the perception of being detected.

7. How do you protect the identity of a whistleblower or Complainant?  Are employees who wish to come forward appropriately protected?

Despite legislation and internal corporate policies that may formalize protection of whistleblowers, challenges include:

• No legal privilege exists to protect the identity of a whistleblower from being disclosed, for example, in administrative, civil or criminal proceedings i.e. similar to a solicitor/client privilege or police informer privilege; and
• Cannot prevent people from making assumptions as to who the whistleblower may be and taking action against that employee (based on that assumption) under the pretense of day to day management.

Because the identity of a whistleblower (if known) may only be protected to the extent possible by law and in some cases may be assumed, consideration should be given as to whether a written consent or acknowledgement should be obtained from the complainant before taking any action on a complaint in cases where:

• The whistleblower or complainant's identity is required to make the complaint actionable; or
• The circumstances are such that they may point to the identity of the complainant

(e.g. given the complaint details, the information will point to a particular employee in the corporation who may have access to the information).

The real and perceived risk of reprisal against a person who reports allegations of wrongdoing against a colleague, superior or a City vendor is a decisive reason for many to remain silent.  The difficulty in dealing with retribution complaints, as with all other complaints, is that although the complaint may have merit, sufficient evidence is required to support the allegations and arrive at a fair and conclusive finding of wrongdoing.

In our 2006 annual Hotline report we speak to the issue of retribution: http://www.toronto.ca/audit/2007/annual_report_on_status_of_fraud_march2007.pdf

At pg 8:

The City's Fraud Policy includes Whistle-Blower Protection and prohibits retribution against any employee who may have contacted the Auditor General.  In 2006, the Auditor General's Office received three retribution complaints involving employees who have reported an incident of suspected wrongdoing directly to management or through the Fraud and Waste Hotline Program.  We take these complaints extremely seriously.  One of these complaints was withdrawn, a second was determined to be unsubstantiated and the third continues to be outstanding.  While the Auditor General's Office is responsible for the operation of the City's Hotline Program, management is responsible for ensuring employees who report allegations of wrongdoing may do so without reprisal.  The importance of protecting those who report wrongdoing should be conveyed to all City employees, through the education process recommended by the Auditor General.

In our 2010 annual Hotline report we also speak to the issue of whistleblower protection and made a recommendation on ethics training which is to include training to employees on whistleblower retribution: http://www.toronto.ca/audit/2011/fraudwaste-jan18.pdf

This year the Auditor General also issued a separate report with recommendations on whistle blower retribution: http://www.toronto.ca/audit/2011/whistleblowers-jan24.pdf