1. You work for a small manufacturing firm, where it is clearly too expensive to have proper segregation of duties. Because of this lack of control, manage- ment knows that opportunities exist to perpetrate fraud within the company. Management is particu- larly concerned with possible collusion between pur- chasing agents and vendors because of the relatively small size of the company and the fact that a single purchasing agent is often solely responsible for a vendors account. Management knows now that a lot of money can be saved by proactively preventing fraud and not just acting on a reactionary or crisis basis. They have started to establish an open-door policy where all employees are encouraged to talk about pressures and opportunities faced while on the job. Management also wants to establish a hot- line where employees can report suspicious activity.

a. Is an employee hotline necessary?

b. Is this sort of whistle-blowing ethical?

c. What can management do as they establish this hotline to encourage employees to actu- ally use it?