Question 1IntroductionAt the start of this century, the unprecedented collapses of Enron and WorldCom sparked heated global discussions about corporate whistleblowing. In light of this, legislations and professional codes of conduct are being implemented to provide a framework for ethical and financial decision-making, particularly for auditors. This essay covers the prerequisites for an effective corporate whistleblower hotline, steps to avoid potential pitfalls, and an analysis of the pros and cons of having a whistleblower hotline. d'Alford (2001, p.17) and Bok (1980, p.277) in auditing, the whistleblower line is a communication system that allows individuals to raise an alarm within the organization, aimed at highlighting suspicions of accounting fraud, mismanagement or internal control failures that threaten public interests with convincing evidence. Why is this necessary? A whistleblowing hotline helps mitigate the impact of fraudulent acts before it is too late. When Cynthia Cooper revealed a $3.8 billion fraud during internal audit, WorldCom declared bankruptcy with $45.98 billion in liabilities, 20,000 employees were left unemployed and investors lost more than $180 billion. (Soltani 2007, p. 560) If there had been a hotline, the outcome would have been less devastating for stakeholders. It also provides a platform for employees to express themselves. Newcomers fear that seniors will discount their opinions due to a lack of experience. Ethical dilemma is “a situation in which a decision must be made regarding appropriate behavior.” (Michael 2011, p.131) Employees facing an ethical dilemma fear risking their careers for the truth. Therefore, a hotline is available... middle of paper ......ipley, A. (Monday, December 30, 2002) Cynthia Cooper: The Night Detective. [Online] Time Magazine. Available at: http://content.time.com/time/subscriber/article/0,33009,1003990-1,00.html [Accessed March 13, 2014] Maxwell, JC (2003) There's No Tel Thing as “Business " Ethics. New York: Warner Business Books.Cheffers, M., Whalen, D. and Usvyatsky, O. (2013) Financial restatements 2012: a twelve-year comparison.Usvyatsky, O. (2013) Restatements: where they come from. [Online] Audit analysis. Available at: http://www.auditanalytics.com/blog/restatements-where-they-come-from/ [Accessed March 18]Securities Exchange Act of 1934Maleske, M. (2012) 8 Ways SOX Changed Governance business. [Online] Internal advisor. Available at: http://www.insidecounsel.com/2012/01/01/8-ways-sox-changed-corporate-governance?page=3 [Accessed March 18 2014]