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What is an internal investigation and should you launch one?

Corporate governance refers to the system that a board of directors institutes to control or direct their company. Shareholders select these boards, and auditors are appointed to oversee them. They do so to ensure board members are acting in the shareholders’ best interests.

Investigations can be either internal or external and form part of the corporate governance process. These investigations serve as a type of formal inquiry into personnel’s actions to see if they violate any regulations, laws or corporate policies. As such, they may end with any wrongdoers being held liable for damaging a company’s reputation or violating existing policies and laws.

How external and internal investigations differ

External investigations may focus on an employee or board member’s alleged violations of the law or actions that violate government agency regulations. Internal investigations focus on misconduct in the workplace, such as workplace harassment, discrimination or violations of employer rules.

Steps that form part of an internal investigation

An internal investigation should be launched as soon as a corporation receives a complaint. The responsibility of the initial point of contact is to preserve the accuser’s confidentiality as they focus on finding a suitable investigator to assess the situation.

The onus falls on the investigator to devise a plan to investigate the allegations and determine if they are founded. They will generally conduct several days of interviews, culminating in them deciding whether impropriety occurred and closing the investigation.

Who conducts internal investigations?

Internal investigations generally involve employer policy violations. Therefore, in-house counsel, a human resources representative or a compliance officer will handle the inquiry into an employee’s actions. 

Some corporations that do not have an impartial party that fits this bill often hire third-party firms, like a law office, to conduct internal investigations. This approach is particularly common in companies with potential conflicts of interest. The goal is to minimize any potential chances of the investigator having a direct connection to the employee or board member alleged to have engaged in impropriety, such as a data breach.

How long do internal investigations take?

Internal investigations generally take between one and three days to complete. In addition to conducting interviews during this time, investigators also compile and review written or recorded information, including forensic assessment of computers for evidence of misuse. Internal investigations can take longer if there is a lot of evidence to review or if it becomes necessary to involve information technology (IT) personnel, human resources or law enforcement.