The first step in any internal investigation is to assess the nature of the allegations.  This means determining, first, if the allegation is credible.  Specific factual allegations that demonstrate the complainant is familiar with the underlying conduct or the company’s business weigh in favor of his or her credibility.  However, the presence of an ulterior motive, such as allegations being levied by a competitor or an employee facing performance issues (or a former employee who left on bad terms) weigh against credibility.  Second, the allegation must be assessed to determine whether the alleged misconduct is serious or whether the alleged conduct, if true, constitutes a crime or materially impacts the company’s financial performance.  If it is determined that the allegations have legal implications, counsel should be brought in to guide the process.

After the initial assessment of the allegation has occurred, the following questions should be considered:

• Will the allegations be appropriately investigated through an internal investigation?
• Is the company’s compliance program implicated?
• Is senior management implicated?
• Is immediate interim action necessary (e.g., suspend or discontinue certain business)?