Awhistle is usually blown to get attention that will lead to subsequent actionrelating to the reason for which the whistle is blown.

The person who blows thewhistle could be referred to as a whistle-blower.  The act of blowing the whistle to getattention, so as to highlight a situation, which will lead to an action, couldbe referred to as whistleblowing.  The terms whistle-blower and whistleblowingare two relatively new phenomena that have recently entered the corridors ofmany organisations.  According to Gray(n.

d.) “whistleblowing as a metaphor refers to the act of disclosinginformation concerning conduct with or by an organisation that the whistleblower believes to be unethical, illegal, or dangerous with the intent ofhaving the conduct reviewed and stopped. He further purports that”whistleblowing occurs in two contexts; internal whistle blowing involvesdisclosure to higher authorities within an organisation and eternal whistleblowinginvolves disclosure to outside enforcement authorities and or the press”.  Cranville(n.d.

) posited that “although this statement (definition) has been widelyaccepted, researchers have indicated problems with this definition. Farrell andPetersen (1982), for instance, perceived whistleblowing as occurring only wheninformation is leaked to parties outside the organization. That is,whistleblowing can only occur when parties external to the organization areinformed of illegal or unlawful wrongdoing within an organization.

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Theseindividuals may be members of the media, government officials, members ofpublic support groups, or various other parties external to the organization whocan bring about change”.  The authorfurther stated that “Near and Miceli’s (1985) definition of whistleblowing,however, describes it as taking place when a person reports individual orcorporate wrongdoing to sources either internal or external”.Thereview of literature focuses primarily on internal whistleblowing.  This direction is pursued in response to thegrowing need in organisations to improve internal efficiencies, effectivenessand transparency, incorporating the recognition and adherence ofstandards.  Whilst the aim is to improvethe efficiencies in an enterprise, questions arise as to the level ofeffectiveness of whistleblowing and the methodology used to arrive at this.  Effective whistleblowing is defined as “theextent to which the questionable or wrongful practice (or omission) isterminated at least partly because of whistle blowing and within a reasonabletimeframe” (Near & Miceli, 1995, p. 681).

 Researchers(for example Nieweler (2005)  have argued that a correlation appears toexist between internal whistleblowing and the effectiveness of the entity.  The strength of the correlation will allowfor the easy discernment of the effectiveness. That is the stronger thecorrelation, the more observable its effectiveness appears.

  Nieweler (2005) posited that “there is a relationship between blowingthe whistle and an organization’s culture. A strong and effective internalethics program is an important component of a healthy corporate culture; effectivewhistleblowing depends on the right corporate culture that encourages concernsto be raised”.   The writer further alluded that “whistleblowingacts as a deterrent to corrupt practices, encourages openness, promotestransparency, establishes the risk management systems, and helps protect thereputation of an organization”. “Whistleblowing should be seen as a safetyvalve, an essential one at that, and should be part of an organization’sinternal controls.

Having a whistleblowing process in place does not meanfailure. Boards need to consider the effectiveness of whistleblowing policiesand procedures as part of their oversight of internal controls, and internalaudit plays an important role in supporting boards in this area”.  “Employees who sound the alarm aboutmisconduct early enough can help to ensure that problems come to light beforeit is too late, helping to prevent disasters from taking over. Anorganization’s whistleblowing procedures should encourage individuals todisclose concerns using appropriate channels before those concerns becomeserious problems, damaging an organization’s reputation through negativepublicity, regulatory investigation, violations and fines”.            Throughout thisresearch various sub-themes will be examined so as to provide a more detailedand in depth application of whistleblowing as a tool of internal control.

These sub-themes include RiskAssessment, Ethics, Socialization and Culture. Enterpriserisk Management is defined as a process, effected by an entity’s board ofdirectors, management and other personnel, applied in strategy setting andacross the enterprise, designed to identify potential events that may affectthe entity, and manage risk to be within its risk appetite, to providereasonable assurance regarding the achievement of entity objectives.  (COSO, 2004). The Committee of SponsoringOrganizations of the Treadway Commission (COSO) states that in assessing risk,management considers expected and unexpected events. Management assesses therisk of unexpected potential events and expected events that can have asignificant impact on the entity. Although the term “risk assessment” sometimeshas been used in connection with a one-time activity, in the context ofenterprise risk management the risk assessment component is a continuous anditerative interplay of actions that take place throughout the entity.

(COSO,2004).Ina research article Lewis & Vandeckerckhove 2011, the editor in comparingwhistle blowing and risk manager, states that even though they are somesimilarities between the two, they appear to be independent and have differentprocess and objectives. The primary focus of whistleblowing is protecting thewhistle blower and the compliance with legal and regulatory frameworks withlittle focus on the potential organisational benefits of whistleblowing inidentifying and managing risk.

 (Whistleblowing and Democratic Values, 2011, p. 56)             Despite the correlation between whistleblowingand risk management, there are very few examples where this relationship isidentified and discussed in the literature. Moeller (2011) is one of those whodiscuss whistleblowing in relation to ERM.

He states that whistleblowingprograms can be a useful tool for ERM but also that ‘whistleblowing cases caninflict serious damage to an enterprise’s reputation as well as on the careersof accused managers’ (p. 204). Moeller emphasises the risk that the ineffectivemanagement of whistleblowing programs may create while mentioning that’whistleblowing provisions are primarily designed to protect employees ratherthan provisions to increase enterprise internal controls or to cover identifiedrisks’ (p. 205).( Lewis David & Wim Vandeckerckhove)Lewis(2011) in his article states that The Association of Certified Fraud Examiners(ACFE), for example, indicates that ‘tips’ have been found to be the mostcommon form of fraud detection in all their research undertaken since 2002. TheACFE research examines occupational fraud, which involves any case where anoccupational position is used for personal gain, in all levels of theorganisation. In 2010, tips accounted for 40.2% of the initial detection offraud.

Management review was the second form uncovering 15% while internalaudit was third uncovering 14% of frauds. The ACFE 2010 report, which is basedon 1,843 cases of fraud reported by the Certified Fraud Examiners in more than100 countries, found that 49.2% of fraud tips were provide by employees and13.4% were provided anonymously. Organisations that had fraud hotlines whereemployees can report suspected wrongdoing without fear of retaliation had ahigher fraud detection rate (47%) than those that did not (34%). ).( LewisDavid & Wim Vandeckerckhove).Overthe years, it has been noted that whistle blowing used as a tool of internalcontrol, leads to a reduction of under-reporting of internal wrongdoings.

Studies have shown that there is a direct correlation between ethics andwhistleblowing and a person’s socio-cultural background and whistleblowing. Asit relates to ethics, an individual will be more inclined to follow aftermorally accepted principles and report wrong doings, if she or he’s moralidentity is high. According to Aquino & Reed, 2002, moral identity is theextent to which individuals consider themselves to be a moral person.Therefore, if a person’s moral identity is high, then that person will be quickto report instances of wrong doings.

If the moral identity is low, then thatperson will not be so willing to report wrong doings. Chung et al. 2004, Pauland Townsend 1996, stated that a good internal whistle-blowing system will leadto the timely detection of fraud, permitting the company to correct thewrongdoing and minimise the costs of the fraud. It is further argued by Coramet al. 2008 that fraud has increased in recent years in terms of the frequencyand costs, with employees and management being the greatest perpetrators. Oneway to mitigate against this is the implementation of an internalwhistle-blowing system that complements the companies’ code of ethics as recommendedby the Standards Australia 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Accordingto Bowden and Smythe 2009; Miceli et al. 2009; Paul and Townsend 1996, whenemployees are encouraged to act within the code of ethics, the safety andwell-being of the organisation is increased, damage claims and legal regulationavoided, the satisfaction of employees increased which will foster greater workcommitments and loyalty.

Mayer, Aquino, Greenbaum, and Kuenzi (2012) found thatethical leadership reduces employees’ unethical behavior and conflict in a workgroup. Den Hartog and Belschak (2012) also showed that ethical leadershipinfluences employee initiative as well as counterproductive work behavior.Therefore, adherence to the code of ethics must be from the top and then movedownwards in organizations.According to Schultz et al. 1993, Brody et al. 1999,Patel 2003, understanding culturally embedded norms that will affect whether ornot an individual participates and does not participate in whistleblowing canassist organizations in the design and maintenance of effective internalcontrol environments globally. There are several behavioural theories thatsupports this issue.

One such theory is the theory of reasoned action whichstates that a person’s behavioural intentions will predict a voluntarybehaviour and that intentions are determined by subjective norms and one’sattitude towards the behaviour. Cialdini and Trost 1998define subjective norms as an individual’s interpretation of the opinions ofimportant others regarding the behaviour in question. In other words, an individual’sopinion who is held in high regard by another, will result in a particularbehaviour or reaction, than someone of less importance. According to Cialdiniand Trost, norms have the capacity to influence human actions because they makeclear the behaviours that are expected of individuals by those in their socialworld.Chiuand Hong 2007 stated that culture functionally enables group members tointerpret and make sense of their world and experiences.

It provides identityand values which drives an individual’s decision making process and socialbehaviour. As such, a corporation’s processes and policies that incorporatesthe influence of subjective norms and attitudes will be more effective in theutilisation of whistleblowing as a means of internal control. Whistleblowingthrives in an environment of inclusiveness and collectivism.             Culture is defined as the ideas, customs, and social behaviour of a particularpeople or society, while socialisation is defined as the process of learning tobehave in a way that is acceptable to society. We look at the impact cultureand socialisation has on “blowing the whistle” in the organisation. Accordingto (Richard G. Brody; John M. Coulter; Suming Lin) “Society continues to be concerned about the impact of ethics ondecision making”, but we would need to go one step further and look closer athow culture, norms and how our socialisation from birth and throughout ouradolescence and adult years helps to shape and impact our ethical and moraldecisions to embrace a whistleblowing phenomenon.

  With the highest of ethical standards that one may possess, what iscustomary and normal, how things are done in and around us, in our country,community, school or workplace, has the potential to outweigh any ethical ormoral high road we wish to walk. Geert Hofstede a known Dutch researcher of culture defines culture as”the collective programming of the mind which distinguishes the members of onegroup or category of people from another. His cultural dimensions theorydescribes the effects of a society’s culture on the values of its members andhow these values relate to behaviours”. His study focused on the multiple ways countries vary in terms ofculture (Brody; Coulter; Lin) e.

g., USA and Taiwanese accounting students and their approach towhistle blowing.            Inan extensive research program Hofstede (1980, 1991) particularly the”Individualism” category between the US and Taiwanese accounting students, thestudy found that Taiwan students had a low individual rating, indicating thatthe focus was more on them and their individual achievement and protectingtheir own interest, while the US scored highest on this measure. This resultindicates that Taiwan has a collective culture, wherein participation in andprotection of one’s in-group is a central value. This may affect audit practiceas the conclusion is that collectivist auditors may be less apt to ask clientsfor “private” information or to report to an outside audit committee onweaknesses in a client’s internal control system” (e.g.

, Cohen et al., 1993), (Brody; Coulter; Lin).Thedecision to “blow the whistle” (Miethe and Rothschild, 1994) on an organizationor an employee whether internally or externally has costs benefits associatedwith such a decision. The fear of been branded the “Snitch” “Informer”,side-lined, victimized or fired from the workplace are major factors anindividual will consider before he considers carrying out such an act. Hissocialization, who his friends are, their opinion, what is normally uttered inthe streets, how his peers will view him are all factors of is culture andsocialization. The past examples of similar acts carried out by associates andany subsequent unpleasant repercussions towards that individual undoubtedlywill play a major role in the decision to blow the whistle as well.

 Dueto these life altering, personal and professional implications, such asdismissal or otherwise retaliated upon (e.g., Finn, 1995; Glazer and Glazer,1989), coworkers who fear retaliation from management may also avoidwhistle-blowers (Miceli and Near, 1992) or feel that the whistle-blower hasbetrayed a trust with the organisation (Dandekar, 1991).

This again could beseen as a direct link between cultural norms and socialisation – not desiringto be labelled or associated with the “traitor” or as in the study on theTaiwanese accounting students “saving face”.