What are the Best Practices for Establishing Procedures for Handling Complaints?

The audit committee must establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential anonymous submission by employees of concerns regarding questionable accounting or auditing matters. This is one of the two provisions of Sarbanes-Oxley that is applicable to all organizations including nonprofits.

We recommend that audit committees adopt a formal “whistleblower policy” that includes the following:

  • Responsibilities of the audit committee
  • Procedures for receiving and investigating complaints
  • Policy for protecting whistleblowers
  • Confidentiality policies for whistleblowers
  • Policy for publication of whistle-blowing procedures

Organizations may consider an anonymous telephone hotline as a means for employees to report complaints.

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