Expense report fraud is every employer’s worst nightmare – and sadly, it’s on the rise. In 2014, approximately 15% of all business fraud occurred through expense reports, says a study from the Association of Certified Fraud Examiners. And if 15% doesn’t seem like much, look at it this way: that’s an average loss of $26,000 every single year.
The finance department isn’t the only one that expense report fraud hits hard. Enough suspicious spending can put an entire organization at serious risk for penalties, investigation, and fines from regulatory bodies. The Canadian government, for example, just wrapped up a deeply involved 2-year probe into what were deemed questionable spending claims that totaled over $1 million.
Putting off the development of a solid strategy to combat expense fraud simply isn’t an option anymore. Organizations must have processes in place to prevent systematic irregularities before they get out of hand. At Concur, we haven’t just studied the devastating effects of fraud – we’ve seen firsthand how the right tools and strategies can set companies up for success. Here are a few ways to keep your expenses on track:
Update your policies
The best defense against fraud isn’t a reaction – it’s a proactive strategy that keeps you one step ahead. Business is changing fast, as are the spending habits or needs of your expense account holders. Having a current policy with realistic boundaries is your first line of defense against unauthorized spending.
Take a close look at your existing policy to:
- Identify areas that need to be improved or clarified.
- Make sure that the rules are written for your employees – not a legal department – and that they can understand the limitations and freedoms that their account comes with.
- Adjust policies according to spending patterns or needs that may have changed over the last few years, such as digital or mobile expenses.
Treat all spenders fairly
Different employees have different budgets – but oversight is important at all levels. Executives and upper level management account for 27% of expense reimbursement cases, says a recent study from the Association of Certified Fraud Examiners. From top to bottom, everyone needs to be held accountable for reported expenses.
To develop more accountability across your teams:
- Set a precedent that all expenses will be carefully monitored – no matter who is making them.
- Keep your employees educated and informed on appropriate expenditures, and what the procedure is if a policy is violated.
- Maintain a healthy dialogue that can lead to fewer errors and more insights for both your expense account holders, and yourself.
Automate routine tasks
Not every error in an expense report is connected to fraud. Manual data entry can account for many issues, including typos, counting receipts twice, or simple mistakes in calculation. When you make it easier for employees to create and submit reports, it’s far more likely that those reports will be accurate.
Automated expense management software eliminates the need for data to be keyed in, eliminating human error. ExpenseIt from Concur automatically creates, itemizes, and categorizes expense entries, making it easier for employees and providing more accurate and timely information for finance teams. With full visibility into every purchase, compliance becomes a breeze.
Make an investment in your future
Taking a proactive stance against expense report fraud is an investment in time and energy. Updating your policies and implementing new software may seem like a big mountain to climb, but it’s worth it. With a solid strategy, fair oversight, and smart tools, your business can face the future – and audit day - with confidence.