In India, Whistle blower complaint has been diverse. Whistle-blowing complaints has been of various kind not just reporting of fraud – viz unethical behavior by individual or group of individuals against company or other individuals, operational challenges, corrupt practices etc. Many a times these compliant have been personal grudges against the Company / individuals which needs to be settled through arbitration, civil dispute resolution mechanism. Considering Indian business experience, Definition of “Whistle blower complaints” may be comprehensively provided where it may cover complaints only where there is fraud on or by the company and involve a significant financial loss to counter party.

The Securities and Exchange Commission announced awards totalling more than $28 million to Seven  people whose information and cooperation resulted in a successful SEC enforcement action during December 2023.

Payments to whistleblowers are made from an investor protection fund created by the United States Congress and funded completely by penalties paid to the SEC by securities law offenders.

When whistleblowers voluntarily give the SEC with original, timely, and reliable information that leads to a successful enforcement action, they may be eligible for a reward. When monetary punishments reach $1 million, whistleblower rewards in the United States can vary from 10% to 30% of the money collected.

According to the Dodd-Frank Act, the SEC preserves whistleblower confidentially and does not divulge any material that may expose a whistleblower’s identity.

In India, there too have been multiple instances of corporate failures, some of them alleged as fraud or scams. The regulators and investigating agencies noted that early warnings may have assisted in reducing financial loss, and hence enhanced disclosures norms were laid down in CARO 2020.

The Auditing and Assurance Standards Board (AASB) of Institute of Chartered accountants of India in 2016 issued a series of new/revised standards on auditor reporting comprising various Standards on auditing’s for “Communicating Key Audit Matters in the Independent Auditor’s Report”. SA 701  is mandatory in the case of audit of listed entities and casted new reporting requirement on auditors of listed entities for communicating key audit matters in their audit reports.

The revisions of auditing standards and implementations of SA- 701 on communication of key audit matters made India comparable to global auditing standard. The purpose of communicating key audit matters (KAM) was to enhance the communicative value of the auditor’s report by providing greater transparency about the audit that was performed. Communicating key audit matters provides additional information to intended users of the financial statements to assist them in understanding those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements of the current period. Communicating key audit matters also helped users of the Fianncial Statement, in understanding the entity and areas of significant management judgment in the audited financial statements.

In India, Whistle blower complaint has been diverse. Whistle-blowing complaints has been of various kind not just reporting of fraud – viz unethical behavior by individual or group of individuals against company or other individuals, operational challenges, corrupt practices etc. Many a times these compliant have been personal grudges against the Company / individuals which needs to be settled through arbitration, civil dispute resolution mechanism. Considering Indian business experience, Definition of “Whistle blower complaints” may be comprehensively provided where it may cover complaints only where there is fraud on or by the company and involve a significant financial loss to counter party. This will help in providing the information to auditors only with respect to financial frauds and not otherwise.

A monetary threshold limit may be provided considering the size and scale of the company and the same may be segregated based on revenue, profit and / or net worth of the company. This will avoid an unnecessary burden on company as well as the auditors to report & consider the immaterial complaints.

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