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, management knows that opportunities exist to perpetrate fraud within the company. Management is particularly concerned with possible collusion between purchasing 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 hotline where employees can report suspicious activity.

Answer and explain the following questions:

(1) Is an employee hotline necessary?

(2) Is this sort of whistle-blowing ethical?

(3) What can management do as they establish this hotline to encourage employees to actually use it?