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The Network and BDO Consulting Release Fourth Quarter 2010 Data in the Quarterly Fraud Index

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The Network and BDO Consulting Release Fourth Quarter 2010 Data in the Quarterly Fraud Index

Fraud reporting on the rise; organizations urged to remain vigilant, continue risk management efforts

ATLANTA – March 1, 2011 – The Network, Inc., a leading provider of governance, risk and compliance (GRC) solutions, and BDO Consulting, a division of BDO Seidman, LLP, today announced the fourth quarter 2010 findings of its Quarterly Corporate Fraud Index™, a comprehensive examination of fraud incident report activity from 12 million employees worldwide. In addition, the Index introduces two new tracking measures: Fraud Reporting PercentagTM and Fraud-Related IncidentsTM.

In fourth quarter 2010, the Fraud Reporting Percentage (FRP) was reported at 19.6 percent, a statistic measuring fraud reporting in comparison to all compliance reporting activity from more than 1,000 organizations worldwide. This marks the first percentage increase in the FRP since the second quarter of 2009, when fraud-related reports accounted for 20.7 percent of all reports made.

In comparison to the same time period in 2009, the total number of reported fraud-related incidents (Fraud-Related Incidents, or FRI) rose 1.9 percent, a steady increase since the inception of the Quarterly Corporate Fraud Index in 2005.

Other fourth quarter 2010 findings include:

  • FRP (fraud-related reports versus all reporting activity) decreased six-tenths of a percent – from 20.2 percent to 19.6 percent – compared to the same quarter in 2009
  • FRP increased six-tenths of a percent – from 18.8 percent to 19.6 percent – from the third quarter of 2010
  • FRI (incident volume) increased four-tenths of a percent over the third quarter of 2010

“Fraud remains the most serious risk management issue out there,” said Luis Ramos, chief executive officer of The Network. “Industry reports show fraud incidents on the increase, and now fraud reporting, which has equalized at about 20 percent, is syncing up with those numbers.”

Fourth quarter comparisons of Fraud Reporting Percentage for the past six years are as follows:

Fraud Indeix Q4 2010 FRP

4Q 2005 = 11.6%

4Q 2006 = 13.3%

4Q 2007 = 13.0%

4Q 2008 = 18.9%

4Q 2009 = 20.2%

4Q 2010 = 19.6%

Fourth quarter comparisons of Fraud-Related Incidents for the past six years are as follows:

Fraud Indeix Q4 2010 FRI

4Q 2005 = 2822

4Q 2006 = 3937

4Q 2007 = 4478

4Q 2008 = 5392

4Q 2009 = 5804

4Q 2010 = 5915

“Fraud is never a good thing, and risk must be managed,” said Timothy Mohr, Certified Fraud Examiner and partner at BDO Consulting. “While statistically there is little change in fraud statistics, organizations must continually assess their hotline and fraud reporting programs to mitigate the risk of fraud.”

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, 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. To view a social media version of this news release, visit http://pitch.pe/127911.

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 and restructuring 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, mergers and acquisitions, financial solvency and regulatory compliance issues.

BDO Consulting is a division of BDO USA, LLP, a New York 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

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