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Corporate Fraud: the CFO has a Crucial Role to Play

The Network & BDO Consulting Release 2nd Quarter 2012 Findings: Quarterly Corporate Fraud Index. Fraud reporting records largest quarterly increase in more than three years; number of fraud reports at an all-time high.

Corporate Fraud: the CFO has a Crucial Role to Play
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 2012 findings in the Quarterly Corporate Fraud Index TM, a comprehensive examination of fraud reporting activity from almost 15 million employees worldwide.

For the second quarter of 2012, the Fraud Reporting Percentage (FRP) increased to 22.9 percent, marking the fifth consecutive quarter of record-high fraud reporting. The FRP statistic measures fraud reporting in comparison to all compliance reporting activity from more than 1,400 organizations worldwide, including nearly half of the Fortune 500. The second quarter 2012 Corporate Fraud Index also includes the Fraud Related Incidents (FRI) statistic, which measures the volume of fraud-related calls.

Other key second quarter 2012 findings include the following:
- FRP increased 2.1 percentage points – from 21.7 to 22.9 percent – compared with the same quarter in 2011
- FRP grew significantly, an increase of 5.4 percent from the first quarter 2012, which is the largest quarter-to-quarter increase since the first quarter of 2009
- FRI also increased – up 11.7 percent – compared to the same quarter in 2011
- FRI increased 6.0 percent from the first quarter 2012

“From these statistics, it’s evident that more and more employees are getting involved on a daily basis to speak up when they see fraud occurring,” said Luis Ramos, CEO of the Network. “While the bad news is that fraud is still occurring, the good news is that the workforce is becoming more informed about what constitutes misconduct and the actions they can take to make their organization aware of the issues. Clearly, the engaged employee represents the best asset to deterring fraudulent activity.”

Second quarter comparisons of Fraud Reporting Percentage (FRP) for the past eight 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%
2Q 2012 = 22.9%

Second quarter comparisons of Fraud-Related Incidents (FRI) for the past eight 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
2Q 2012 = 7879

“Fraud takes the biggest toll on organizations that are complacent about their anti-fraud measures,” said Glenn Pomerantz, partner at BDO Consulting and a Certified Public Accountant and Certified Fraud Examiner. “However, when organizations apply proactive measures, such as a trusted hotline program, risk assessments and continuous control monitoring, the impact from fraud can be greatly diminished.”

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 reflected in the Fraud Index include reports on corruption, theft, accounting and audit irregularities, misuse of assets, conflicts of interest, and violations of FCPA, UK anti-bribery and SEC legislation.

Mardi 9 Octobre 2012

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