CHAPTER 3: Frank is a friend of yours and works with you at the same company. He

CHAPTER 3:
Frank is a friend of yours and works with you at the same company. He is a well-respected and trusted employee. He has two young children and is a leader in his community. You have discovered that Frank has embezzled $3,000 over a period of several years. While this is not much money for such a large company, you suspect that if you don’t report him, the problem may get worse. On the other hand, he has young children, and he has done so much good in the company and the community. If you report him, he may go to prison because your company has an aggressive fraud prosecution policy. Should you report him or are there any other alternatives ways to deal with this problem available to you?
CHAPTER 4:
You work for a small manufacturing firm, where it is clearly too expensive to have proper segregation of duties. Because of this lack of control, management knows that opportunities exist to perpetrate fraud within the company. Management is particularly concerned with possible collusion between purchasing agents and vendors because of the relatively small size of the company and the fact that a single purchasing agent is often solely responsible for a vendor’s account. Management knows now that a lot of money can be saved by proactively preventing fraud and not just acting on a reactionary or crisis basis. They have started to establish an open-door policy where all employees are encouraged to talk about pressures and opportunities faced while on the job. Management also wants to establish a hotline where employees can report suspicious activity.
Questions:
a. Is an employee hotline necessary?
b. Is this sort of whistle-blowing ethical?
c. What can management do as they establish this hotline to encourage employees to actually use it?