The purpose of an internal investigation is to determine if the organization’s policies, laws, and/or regulations have been violated.
Typically, internal investigations begin after an internal or external source alerts the company to potential misconduct. The most common triggers for internal investigations are requests for information from law enforcement or regulatory agencies, warrants, audit reports, media reports, or whistleblower allegations.
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The following are some reasons why internal investigations are important:
- Problem identification and solution: Internal investigations help companies identify and solve issues that may negatively impact the company’s reputation and/or operations. Financial fraud, employee misconduct, and other wrongdoing can be detected by internal investigations. In order to determine what happened, the company investigates and conducts interviews to find relevant information and documents, and then takes appropriate measures to fix the problem.
- Maintaining credibility and integrity: Companies conduct internal investigations when they receive a tip from external or internal sources or when they are under external pressure to resolve issues related to unethical practices, financial fraud, or transgression. An internal investigation shows that the company is committed to identifying and resolving issues; this helps them maintain the trust of stakeholders, the judiciary, the government, and the public in general.
- Creating a conducive work environment: When companies do internal investigations and identify issues and collect all the evidence to punish the culprit or take appropriate action to fix the issue, it helps in creating a conducive work environment for employees to perform at their best. It has been proven that firing or punishing a toxic manager or top-level executive who has committed sexual misconduct creates a relaxed work environment where everyone feels comfortable and can perform better.
- Prevent future problems: Companies can prevent future problems from occurring by identifying the root cause of an issue that has been identified. An organization may prevent future fraud by identifying and repairing things that caused and encouraged employees to commit fraud in the past.
Conclusion
Internal investigations are an important tool for companies to maintain trust with their stakeholders, create a safe and positive working environment for employees, prevent future issues, and ensure that they are operating ethically and responsibly.
