ATLANTA – The Network, Inc., a leading provider of governance, risk and compliance (GRC) solutions, and BDO Consulting, a division of BDO USA, LLP, today announced the second quarter 2011 findings of its Quarterly Corporate Fraud Index™, a comprehensive examination of fraud incident report activity from almost 15 million employees worldwide.
For the second quarter of 2011, the Fraud Reporting Percentage (FRP) was reported at 20.8 percent – the highest quarterly rate since the inception of the Index in 2005. The FRP statistic measures fraud reporting in comparison to all compliance reporting activity from more than 1,000 organizations worldwide. FRP also rose 2.5 percent since last quarter.
Other second quarter 2011 findings include the following:
“This is the highest quarterly rate we’ve ever witnessed,” said Luis Ramos, chief executive officer of The Network. “However, a high fraud reporting rate may have a silver lining. Organizations are experiencing more incidents, but they are capturing more, too. Therefore, they have a greater chance to reduce ongoing loss.”
Ramos continued, “We know from experience that trends around fraud incidents usually follow the economic curve, but the reporting of fraud often occurs days, even weeks or months, after incidents begin taking place.”
Second quarter comparisons of FRP for the past seven years are as follows:
Second quarter comparisons of FRI for the past seven years are as follows:
“A confluence of factors that impact employees’ awareness and willingness to report may be attributable to the increase in the number of incidents reported recently, including a challenging economy, greater enforcement of anti-corruption legislation and the financial incentives arising from the implementation of the Dodd-Frank Act,” said Timothy Mohr, Certified Fraud Examiner and partner at BDO Consulting. “Given the rise in incident reporting, it’s important for companies to evaluate when a formal investigation is warranted and have procedures in place to outline the action steps necessary to resolve incidents in a timely manner so that further risk can be mitigated.”
The Quarterly Corporate Fraud Index is compiled from actual incidents reported by clients of The Network and is analyzed by The Network and BDO Consulting. Fraud-related incidents include reports on corruption and fraud, theft, misuse of assets, conflicts of interest and FCPA violations.
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. is a leading provider of governance, risk and compliance solutions that help organizations mitigate risk and promote organizational compliance. Through the integration of on-demand software and services, The Network helps clients identify, communicate, resolve and mitigate risk issues and incidents. Established more than 28 years ago, The Network serves thousands of organizations in every industry, including nearly 50 percent of the Fortune 500. For more information, visit www.tnwinc.com.
About BDO Consulting
BDO Consulting provides litigation, investigation, business restructuring and risk advisory services to clients in the United States and internationally. Our highly experienced and well-credentialed professionals leverage the global industry and accounting knowledge of the BDO international network, providing rapid, strategic advice to assist our clients.
BDO Consulting is a division of BDO USA, LLP, a Delaware limited liability partnership and the U.S. member of BDO International Limited. BDO International Limited is a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. www.bdoconsulting.com
For the second quarter of 2011, the Fraud Reporting Percentage (FRP) was reported at 20.8 percent – the highest quarterly rate since the inception of the Index in 2005. The FRP statistic measures fraud reporting in comparison to all compliance reporting activity from more than 1,000 organizations worldwide. FRP also rose 2.5 percent since last quarter.
Other second quarter 2011 findings include the following:
- FRP (fraud-related reports versus all reporting activity) increased 1.2 percentage points – from 19.6 percent to 20.8 percent – compared to the same quarter in 2010
- Fraud-Related Incidents (FRI), the total number of reported fraud-related incidents, increased significantly – 18.3 percent – compared to the same quarter in 2010
- FRI also increased significantly in comparison to the first quarter 2011 – 15.4 percent
“This is the highest quarterly rate we’ve ever witnessed,” said Luis Ramos, chief executive officer of The Network. “However, a high fraud reporting rate may have a silver lining. Organizations are experiencing more incidents, but they are capturing more, too. Therefore, they have a greater chance to reduce ongoing loss.”
Ramos continued, “We know from experience that trends around fraud incidents usually follow the economic curve, but the reporting of fraud often occurs days, even weeks or months, after incidents begin taking place.”
Second quarter comparisons of FRP for the past seven years are as follows:
- 2Q 2005 = 9.2%
- 2Q 2006 = 11.9%
- 2Q 2007 = 13.8%
- 2Q 2008 = 19.4%
- 2Q 2009 = 20.7%
- 2Q 2010 = 19.6%
- 2Q 2011 = 20.8%
Second quarter comparisons of FRI for the past seven years are as follows:
- 2Q 2005 = 2348
- 2Q 2006 = 3406
- 2Q 2007 = 4780
- 2Q 2008 = 5862
- 2Q 2009 = 6037
- 2Q 2010 = 5963
- 2Q 2011 = 7054
“A confluence of factors that impact employees’ awareness and willingness to report may be attributable to the increase in the number of incidents reported recently, including a challenging economy, greater enforcement of anti-corruption legislation and the financial incentives arising from the implementation of the Dodd-Frank Act,” said Timothy Mohr, Certified Fraud Examiner and partner at BDO Consulting. “Given the rise in incident reporting, it’s important for companies to evaluate when a formal investigation is warranted and have procedures in place to outline the action steps necessary to resolve incidents in a timely manner so that further risk can be mitigated.”
The Quarterly Corporate Fraud Index is compiled from actual incidents reported by clients of The Network and is analyzed by The Network and BDO Consulting. Fraud-related incidents include reports on corruption and fraud, theft, misuse of assets, conflicts of interest and FCPA violations.
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. is a leading provider of governance, risk and compliance solutions that help organizations mitigate risk and promote organizational compliance. Through the integration of on-demand software and services, The Network helps clients identify, communicate, resolve and mitigate risk issues and incidents. Established more than 28 years ago, The Network serves thousands of organizations in every industry, including nearly 50 percent of the Fortune 500. For more information, visit www.tnwinc.com.
About BDO Consulting
BDO Consulting provides litigation, investigation, business restructuring and risk advisory services to clients in the United States and internationally. Our highly experienced and well-credentialed professionals leverage the global industry and accounting knowledge of the BDO international network, providing rapid, strategic advice to assist our clients.
BDO Consulting is a division of BDO USA, LLP, a Delaware limited liability partnership and the U.S. member of BDO International Limited. BDO International Limited is a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. www.bdoconsulting.com