Ethicspoint Enters Market to Help Confront Fraud and Abuse.

Business Editors, Technology Writers

PORTLAND, Ore.--(BUSINESS WIRE)--Sept. 19, 2002

Innovative global web-based reporting system supports Sarbanes-Oxley Act and calls for increased ethical values in business and government

Ethicspoint launched a first of its kind worldwide, web-based reporting system that allows employees, vendors or customers to anonymously report misconduct or ethical violations in public and private companies, government agencies or non-profit organizations.

In addition to eroding share value and deflating confidence in institutions and businesses, losses due to fraud and abuse are staggering. With Congress and the public questioning corporate America's values and standards, there is enormous pressure on business to meet the increased ethical expectations, with little room for compromise.

Although exposure in the market is relatively recent, the system is being received with enthusiasm in the private and public sector. "The primary attractiveness of Ethicspoint is that it provides a non-threatening vehicle, readily empowering employees to partner with management to help assure a safe and secure work environment," reports Harry J. Argue, executive vice president/CEO Wisconsin Bankers Association. "The program constructively resolves potentially difficult dilemmas."

Recent studies indicate that employees are aware of inappropriate behavior long before it comes to the attention of management. In fact, they show that 75% of employees have such knowledge and that the average fraud scheme lasts 18 months before detection. Exposing fraud and abuse most often occurs from a tip or by accident. Most employees do not provide this information because they fear retaliation or retribution. Ethicspoint's patent pending system is truly confidential and is designed to protect the anonymity of the reporter.

The recent passage of the Sarbanes-Oxley Act by Congress requires that an "audit committee shall establish procedures for the receipt, retention and treatment of complaints", and if the information concerns financial or accounting irregularities the reporting method must provide for anonymous and confidential delivery. The American Bar Association Task Force on Corporate Responsibility has recommended that "corporate governance should establish a mechanism of communication of information about violation of law and breaches of duty to the corporation."

According to David Childers, the company's chief executive officer, the Ethicspoint solution is a combination of years of fraud and abuse experience, combined with the latest technological advances. Ethicspoint offers private and public sectors the opportunity to confront the problems that result in misuse of funds or pose a safety and security concern in the workplace. "Our goal is to support a positive work environment where stakeholders in a company can exert influence without concern."

Ethicspoint has another feature that is attractive to managers. It is a great return on investment. It offers a low entry cost for a reporting system that provides a high level of discovery, which reduces losses in revenues, productivity or the cost of penalties.

Childers points out that by harnessing the reach of the Internet, Ethicspoint provides several advantages versus current toll-free reporting hotlines, corporate e-mails or internal surveys. "It is wholly anonymous, easy to use, and accessible 24 hours a day from any part of the world. The system also provides the reporter with a unique username and password to allow for review of a company's follow-up questions and response without sacrificing the reporter's anonymity."

Once installed, each employee will have an identifiable Ethicspoint icon on his or her computer's taskbar. With one click on the icon, they can go directly to the Ethicspoint server. If the reporter chooses to access the system at a location other than work, they can do so by going to www.ethicspoint.com or by calling 888-ETHICSP. The reporter will be given a random password so they can check back to see any response from management. From either location, the message is encrypted to prevent the reporter's identification.

Each Ethicspoint client establishes a report distribution protocol and level of oversight that meets their unique organizational needs. This provides Ethicspoint with strict guidelines for selective distribution of reports based on the nature of the issue. For example, the audit committee would only receive audit and accounting allegations, while reports on harassment would be directed to the head of the Human Resources Department. The system ensures that reports are never shared with impacted parties, their peers or subordinates.