The Network Releases Third Quarter 2009 Fraud Reporting Data in Quarterly Corporate Fraud Index
Fraud Incident Reporting Levels in 2009, Following Significant Reporting Increase in 2008
10.22.2009 – The Network, Inc., a leading provider of governance, risk and compliance solutions, today released the third quarter 2009 findings of its Quarterly Corporate Fraud Index.
In conjunction with BDO Consulting, The Network found that fraud incident reporting in the third quarter accounted for 20.2 percent of all compliance hotline-related activity from more than 1,000 organizations worldwide. This percentage is slightly down from the first and second quarters of 2009, when fraud-related reports accounted for 20.6 and 20.7 percent respectively.
“Difficult times often blur ethical lines for employees, but they can also act as a catalyst for strengthening the systems for detecting and deterring corporate malfeasance,” said Luis Ramos, chief executive officer of The Network.
Key findings of the third quarter 2009 data from the Quarterly Corporate Fraud Index include:
• There was a significant increase in fraud incident reporting from the third quarter of 2007 to the third quarter of 2008—from 13.3 percent to 18.6 percent—but fraud reporting has leveled in 2009.
• In the third quarter of 2009, fraud-related reports, including corruption and fraud, misuse of assets, conflicts of interest and Foreign Corrupt Practices Act (FCPA) violations, among others, accounted for 20.2 percent of all reports.
• Fraud-related reports in the third quarter decreased nominally from the first and second quarters of 2009 at 20.6 and 20.7 percent respectively.
“Organizations have been able to maintain a heightened sensitivity to fraud through 2009, which may have been triggered by the economic events of the third quarter of 2008” said Timothy Mohr, CFE and Partner at BDO Consulting. “Organizations that want to build ethical cultures and reduce their losses can take certain, proactive steps such as high-impact ethics programs and well-executed investigations.”
According to a recent industry report, U.S. organizations lost seven percent of their annual revenues to fraud, and this translates to approximately $994 billion in fraud losses annually.
The Quarterly Corporate Fraud Index is a comprehensive examination of incident report activity from 12 million employees worldwide. The data is compiled from actual incidents reported by clients of The Network and was analyzed by The Network and BDO Consulting.
For more information regarding the Quarterly Corporate Fraud Index, visit www.tnwinc.com or email corporatefraudindex@tnwinc.com.
About The Network, Inc.
The Network, Inc. provides solutions to help clients foster an ethical culture and mitigate risk. Through a holistic integration of information capture, incident and case management, business intelligence, analytics and employee communications, The Network serves thousands of organizations in every industry, including nearly 50 percent of the Fortune 500. Established more than 25 years ago, The Network pioneered the development of anonymous ethics and compliance reporting systems. For more information, visit www.tnwinc.com.
About BDO Consulting
BDO Consulting, a division of BDO Seidman, LLP, provides litigation, investigation, restructuring and risk advisory services to major corporations, law firms, insurance companies, financial services entities, and government organizations. Our highly experienced and well-credentialed professionals draw upon a range of industry knowledge and completed consulting engagements throughout the United States and internationally to provide clients with unparalleled service. BDO Consulting leverages the global industry and accounting knowledge of the BDO International network, providing rapid, strategic advice to assist our clients with dispute resolution, risk management, financial solvency and regulatory compliance issues. www.bdoconsulting.com.
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- Fraud incident reporting levels in 2009,following significant reporting increase in 2008, according to The Network.
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- There was a significant increase in fraud incident reporting from the third quarter of 2007 to the third quarter of 2008—from 13.3 percent to 18.6 percent—but fraud reporting has leveled in 2009.
- According to Luis Ramos, chief executive officer of The Network,"Difficult times often blur ethical lines for employees, but they can also act as a catalyst for strengthening the systems for detecting and deterring corporate malfeasance."
- According to a recent industry report, U.S. organizations lost seven percent of their annual revenues to fraud, and this translates to approximately $994 billion in fraud losses annually.
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