How to Conduct an Ethics Investigation from Beginning to End

Posted by | September 14, 2023 | Audit Career Trends, CIA Recruitment, Forensic Audit, Fraud Audit

Ethics investigations can be challenging for just about any organization. If done right, an ethics investigation can help you identify wrongdoing and unethical behavior and put a stop to it before your organization pays the price for not maintaining a conducive and compliant work environment.

A poorly executed ethics investigation, however, can become a full-blown legal case, with the organization risking reputational and financial damages.

Customers and Shareholders prefer engaging with a business that’s known to be highly ethical. This means your business has proper systems for reporting, investigating, and implementing recommendations to improve ethics within the company and its workforce.

But how can you conduct a successful ethics investigation to ensure the least possible legal and reputational trouble for your business? Here’s a look into the process.

What Would Warrant an Ethics Investigation?

A workplace ethics investigation is typically conducted when there’s credible information about significant misconduct, wrongdoing, or ethical lapses within the organization. These include office theft or fraud, health and safety violations, misconduct such as harassment and workplace violence, and time theft, such as altering time sheets for greater earnings.

An ethics investigation can also be warranted if there have been allegations against other employees to exclude the possibility of wrongdoing within the company. For instance, employee whistleblowers expose fraud in an organization 43 percent of the time compared to professional internal auditors, who only successfully uncover it 19 percent of the time,.

An ethics investigation aims to protect the company’s and its shareholders’ interests. It detects and prevents violations and misconduct, identifies areas where the business can improve its internal operations, and ensures the company’s activities comply with applicable laws and regulations.

An ethics investigation will unearth whether suspected misconduct did or did not take place, the circumstances leading to the misconduct, the involved parties, and whether the law or company policy was violated. An ethics investigation must be perceived to be independent, thorough, and analytical.

Whom Should Be First Informed of an Ethical Issue?

Typically, employees should be able to report potential ethical issues to their manager or supervisor. If this option is impractical or the manager or supervisor can’t resolve the issue, they should be able to speak up to people in higher positions and get the audience they need. This may include making a complaint through the company’s compliance hotline or corporate ethics office, where their reports can be heard and determined impartially and with maximum confidentiality.

Ensuring employees have a clear channel for making complaints and addressing them is crucial to avoiding lawsuits related to ethical issues and compliance and saving your organization expensive legal fees.89% of employees who sue their employers do not receive a satisfactory resolution to their issues internally.

What is the Process of an Ethics Investigation?

An ethics investigation can take various stages depending on the industry or organization and its ethics investigation process. However, most investigations take the following steps.

1. Taking the Initial Complaint
An ethics investigation begins when you’re alerted of unethical behavior by someone within the company. The employee will file the complaint through the necessary channel or people. They will be responsible for documenting as much information as possible about the alleged misconduct.

The information filed from the complaint should include who is being accused of misconduct, what information has been given about their behavior, where the misconduct allegedly happened, how it happened, and when it occurred.

This information should be forwarded to your HR team and the department most affected by the ethical incident.

2. Ensure Confidentiality
Every aspect of an ethics investigation must be kept confidential. Maintaining confidentiality is crucial to the investigation’s integrity. If the investigation is not kept confidential, you risk consequences such as:

  • Undermining the success of the investigation since others know of it
  • Reputational damage to the accused if others learn about the allegations
  • A compromised ability of the company to defend against any legal action associated with the investigation
  • Liability and negative publicity for the company
  • Retaliatory action from the accused
  • Attempts to cover up the misconduct by the accused

Confidentiality begins immediately after the complaint is received. No other party should know that an investigation is underway, who is the subject matter, the evidence and materials gathered, the processes followed, and the investigation’s results until the final report is ready.

3. Give Interim Protection
Protecting the accuser or alleged victim should be one of the top considerations immediately after receiving the complaint. Separating the accused from the alleged victim may be necessary to avoid continued harassment or retaliation.

Some protective measures include providing a leave of absence, transfer, or schedule change. However, the complainant must be willing to take these measures. Otherwise, they can view your actions as retaliatory and file a retaliation suit.

4. Select an Investigator
A competent investigator must handle an ethics investigation. Typically, the investigator should possess the following traits:

  • Investigate objectively without bias
  • Have no stake in the outcome, a personal relationship with the parties involved, or have their position in the organization affected by the outcome
  • Possess previous investigative knowledge and working knowledge of labour and employment laws
  • Strong interpersonal skills to build a positive rapport with the involved parties and appear neutral and fair
  • Right temperament to conduct interviews
  • Attention to detail

5. Conduct Investigations
Once you’ve selected the investigator, you should start the investigations immediately, working quickly to identify and stop the unethical behavior before it spirals into bigger organizational issues.

While conducting investigations, the investigator should be thorough in finding the truth and reassuring employees that their submissions are confidential and non-retaliatory. This will ensure they’re more honest, contributing positively to the process.

6. Provide Guidance and Recommendations and Document the Report
Once you’ve completed the investigations, the investigator should present all gathered information and provide a recommendation for the company moving forward. This may involve recommending disciplinary action against the accused employee and effecting policy changes to ensure such incidents don’t reoccur.

After completing this process, you should write a detailed and comprehensive investigation report to provide a reference for future investigations and clear evidence that the investigation was conducted according to procedure.

Having a written investigation report will also help your legal team make a defense in court if the accused employee disputes the disciplinary action in court.

7. Talk to a Compliance Expert
An ethics investigation is a crucial process that your organization must handle properly. An effective ethics investigation process will help your organization remain compliant and avoid damaging lawsuits that can hurt its reputation and finances.

We can hope that we will never have to conduct an ethics investigation, but at most organizations of any size, the time will likely come at some point where we must. Following these steps should ensure a sound and productive ethics investigation. Done right, a proper investigation can get to the bottom of wrongdoing, put an end to the bad behavior, and hold those responsible to account.

Audit International are specialists in the recruitment of Auditors and various Corporate Governance Professionals including Internal Audit, Cyber Security, Compliance, IT Audit, Data Analytics etc. across Europe and the US.

If you would like to reach out to discuss your current requirements, please feel free to reach us via any of the following:
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