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By Marcus Hoy
Oct. 21—Denmark's Data Protection Agency published a notification form Oct. 14 for use by accounting firms subject to new employee whistleblowing rules. The form must be completed by firms required to establish whistleblowing programs requiring DPA authorization under legislation passed in June.
In an Oct. 14 statement, the DPA said that the new document (WB1) would replace existing notification procedures and should be used for both voluntary and statutory whistleblowing programs. Previously, two forms—FWB1 and FWB2–were used to notify the DPA of mandatory and voluntary whistleblowing programs in the financial sector.
On June 8, amendments to the Act on Auditors and Audit Firms (631/2016) took effect, requiring accounting firms to introduce mandatory whistleblowing programs. Under the new rules, covered employers must create a mechanism to allow employees to report actual and potential violations of the law through channels separate from the traditional management structure. If necessary, these programs can be outsourced.
The rules, which specifically prohibit negative treatment of employees for whistleblowing, transpose into Danish law a number of amendments to European Union directives, including Directive 2014/56/EC requiring EU nations to ensure that adequate arrangements are in place to protect and encourage whistleblowers in the accounting sector.
In an Oct. 18 statement provided to Bloomberg BNA, Norrbom Vinding attorney Jens Harkov Hansen pointed out that existing whistleblower mechanisms are seldom used and that the new rules will entail additional burdens for accounting firms.
“If a business does not have a whistleblower scheme already, the new rules will in my opinion entail a greater documentation burden,” Harkov Hansen said. “Setting up a whistleblower scheme will in practice require that you develop a whistleblower policy containing the general elements required by the DPA. Also, the business must file an application with the DPA and consider whether the set up should be handled internally or outsourced. Furthermore, businesses must establish procedures with regard to notifying employees who are subject to whistleblowing.”
When similar requirements for the financial sector were introduced in 2014, Harkov Hansen said, the DPA established a “fast track” authorization procedure on whistleblower applications.
“A similar approach is also envisaged in 2017,” he said.
“Noncompliance with the Data Protection Act would normally result in the DPA issuing an opinion criticizing the matter,” Harkov Hansen said. “In rare situations, noncompliance could be subject to a fine issued by the police.”
In an Oct. 18 statement, Peter Krogh Olsen, advisor to the industry group Danish Auditors (FSR), pointed out that the new whistleblowing requirement would only cover breaches of the Act on Auditors and Audit Firms and the nation's Audit Regulation.
“It is important to emphasize that the duty only extends to the establishment of whistleblowing procedures and there is no obligation for employees to use them,” Krogh Olsen told Bloomberg BNA. “The aim is to strengthen the quality of existing internal dialogue, monitoring and management and allow employees to speak up without fear of reprisal. However, open consultation will always be preferred.”
“As there are demands for the establishment of whistleblowing systems in the Audit Act, the proposed Money Laundering Act and perhaps other laws, it is probably simpler from a procedural point of view that a single form is used,” Krogh Olsen said. “While the form will seek permission to process information about financial crimes, the legal amendment only requires firms to implement a system that relates to reports of violations of the accounting regulations.”
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