"Perceived Effectiveness of Hotline Reports Increases When Reported to Audit Committees"

Samjong KPMG and IIA Korea Survey on Whistleblowing
"Need for Organizational Culture Improvement and Active Promotion"

A survey found that when audit committees receive direct reports on the detailed contents of whistleblower reports regarding misconduct, awareness of the effectiveness of the whistleblower system increases.

According to the joint publication "Current Status and Implications of Whistleblower Hotline Program Operations" released on October 29 by the Samjong KPMG Audit Committee Institute and the Institute of Internal Auditors Korea (IIA Korea), companies that report all misconduct whistleblower cases received through their hotline program to their audit and audit committee showed the highest respondent perception scores regarding the program's effectiveness. The report analyzed the correlation between the reporting methods of hotline whistleblower cases and perceptions of program effectiveness, targeting 178 domestic companies operating hotline programs.

Kim Minkyu, Deputy CEO and Leader of the Samjong KPMG Audit Committee Institute (ACI), stated, "If the audit and audit committee receive detailed reports of hotline cases and monitor investigation results and follow-up actions, it sends a message that 'whistleblowing is respected and protected as a healthy act of raising issues.' He emphasized, "Overseas research also confirms that one of the key factors influencing the intention to report misconduct is 'ethical leadership.'"

Meanwhile, the most frequently cited improvement measure for hotline programs by respondents was "active education, promotion, and organizational culture improvement regarding the program (68.0%)," followed by "guaranteeing the anonymity of whistleblowers (62.4%)," and "leadership commitment and interdepartmental cooperation (56.2%)."

Additionally, an analysis of the correlation between promotion frequency and perceived effectiveness showed that companies conducting promotions three times or more per year had the highest levels of perceived effectiveness regarding the hotline program.

Lee Ukhee, President of the Institute of Internal Auditors Korea, pointed out, "There are still many cases where employees are not even aware of the existence of the hotline program within the organization, or question the effectiveness of whistleblower protection measures." He added, "It is necessary to meticulously design the process from report receipt to investigation and follow-up actions, as well as whistleblower protection mechanisms, and actively inform various stakeholders, including employees and partner companies."

Samjong KPMG established the Audit Committee Institute (ACI) in 2015 as the first in the accounting industry, and has since published a variety of research reports aimed at enhancing the role and status of audit committees. This report can be found on the Samjong KPMG website.