Anonymous Reporting Programs and Employee Hotlines MySafeWorkplace

1. Anonymous Reporting Programs andEmployee Hotlines MySafeWorkplace.com 5995 Greenwood Plaza Boulevard, Suite 110 Greenwood Village, Colorado 800.650.7005

2. Mr. Steve Foster is the President of Business Controls, Inc. Mr. Foster’s 25 years of unique and diversified executive and operational leadership experience combines enterprise Governance, Risk and Compliance expertise. He has expert knowledge regarding the convergence of security and technology, as well as top level consulting and training in EEO/Internal Controls matters. Mr. Foster’s expertise is rooted in developing integrated SaaS technology solutions in the Governance, Risk and Compliance space. Mr. Foster frequently lectures across the country on the topics related to risk management, ethics and corporate compliance, conducting ethical workplace investigations, fraud, workplace violence, and the convergence of technology and security. Mr. Foster is board certified in Security Management (CPP designation) and in Case Management for Internal Investigations (PCI designation) by ASIS International and is National Chair of the ASIS Business Practices Council and he is an ASIS National CPP Review Course Instructor. Your Presenter

3. Quick Quiz Fraud is most often revealed by? A tipster Chance An audit

4. Quick Quiz Most tipsters request anonymity? True False

5. Quick Quiz Monetary incentives increase the volume and quality of tips ? True False

6. “I am incredibly nervous we will implode in a wave of accounting scandals, and our [successes are] nothing more than an accounting hoax.”

7. “I am incredibly nervous we will implode in a wave of accounting scandals, and our [successes are] nothing more than an accounting hoax.” —Sherron Watkins Former Enron, VP Corporate Development and Whistleblower

8. “The company is probably in the strongest and best shape that it has ever been in…There are no accounting issues, no trading issues, no reserve issues, no previously unknown problem or issues.” —Kenneth Lay, Enron CEO statement to Wall Street

9. Objectives Examine the need, benefit and value of anonymous incident reporting systems Discuss the key elements of an effective AIRS Learn how AIRS can improve workplace safety and productivity Questions and answers

10. Trends • More sophisticated crimes and offenders • More victims of chance than victims of choice • Greater use of technology • Larger losses • More litigation

11. Organizational Profile • Has no crime prevention or detection strategy • Ineffective or inadequate policies • Focuses on problems, rarely solves underlying issues • Has communication problems across all levels Viable ^

12. Modern AIRS • Permits users to anonymously and safely report illegal, unethical and improper workplace behavior • 24/7 toll-free telephone and Internet access • Multi-lingual capability • Automated report distribution and alerts • Case management capable with customized, detailed reporting

13. Key Benefits • Dramatically reduce losses from theft, fraud and employee dishonesty • Effective barrier against workplace substance abuse • Mitigates liability • Federally mandated for publicly traded companies • Demonstrates to employees and shareholders the organization cares!

14. Common Myths • False reports are common and create liability • Employees are distrustful and won’t make reports • Out-sourcing is expensive and unnecessary, “besides, our open-door policy does the same thing.” • All anonymous incident reporting systems are alike

15. “I wish we would get caught. We’re such a crooked company.” —Sherron Watkins

16. “I had every reason to think that the underlying businesses, the fundamentals of the underlying businesses, were strong.” —Kenneth Lay

17. Enron Facts • 5000 jobs eliminated • Stock went from $90 to Zero • $61 B shareholder value lost • $83 K lost per employee • Arthur Andersen, LLP collapsed • 7th largest bankruptcy in U.S. history

18. Enron Facts • Vinson Elkins billed Enron $27 million for its investigation of the Watkins allegations Time Persons of the Year 2002 Sherron Watkins Colleen Rowley Cynthia Cooper

19. Enron Facts • Anderson billed $52 million for audit and accounting services the year prior

20. Sarbanes-Oxley • Applies to public companies only • Independent board and audit committee • Assessment and disclosure • Disclosure of “material correcting adjustments” • CEO and CFO certification

21. Section 301(4) receipt, retention and treatment of complaints…regarding accounting, internal controls, or auditing matters; and confidential, anonymous submission by employees…of concerns regarding questionable accounting or auditing matters.”

22. Consider “Whistleblower” protection implications Confidentiality and discovery issues Contract and insurance coverage Vendor’s skill and experience Vendor’s promises and claims Testing

23. Internal v. External Internal Solution • Relatively easy to launch • Initial small investment • Rarely trusted • Very difficult to properly administrate • Significant legal exposures • Security, scalability, and sustainability issues

24. Internal v. External External Anonymous Incident Reporting System (AIRS) Very easy to launch, maintain, and secure Small investment Highly trusted Very easy to administrate Significant legal protections

25. SaaS Model • 24/7 Call center • Trained, multi-lingual call-takers • Internet interface • Flexible report dissemination and retention system • Easy roll-out • Simple user interface • Consulting and support

26. Warning Signs • Low call volume • Missing or incomplete reports • Delays in receiving reports • All reports are anonymous • Allegations seem to all point to one group or area

27. Litigation Avoidance Follow policy Retain all reports and document findings and determinations Treat all people with respect and dignity Protect confidentiality Comply with the law

28. “We lost value in several equity investments in 2000, $500 million of lost value.” —Sharon Watkins

29. “The collapse of Enron and the subsequent collapse of Arthur Andersen were tremendous tragedies. But as I stated at the time of my indictment on July 8, 2004, failure does not equate to a crime.” —Kenneth Lay

30. Questions?