In the highly regulated and dynamic industry of life sciences, compliance is top of mind. But the pressure to stay in compliance to ensure you are following the current accounting and financial regulations is difficult for any organization who is in the race to innovate. And while many organizations have auditing processes in place, a 2018 fraud and compliance survey among life science industry professionals found that many are still uncertain about their current procedures.
What can you do to better manage compliance and regain confidence when fraudulent behavior arises? Or prepare in case of a government audit? Here’s what you need to know:
1. Monitor and audit expense reports for compliance
This one may seem like a no-brainer. But not every organization audits every expense report. But with almost 20% of travel and expense (T&E) expenses falling outside of policy, monitoring and auditing expense reports should be made a top priority. Whether you use an internal team or external auditors, make sure your employees’ T&E expenses are within policy from the get-go to ensure compliance in the long run. Fraud and compliance violations can lead to more than just monetary loses in a highly regulated industry; essentially, your organization’s reputation could be on the line.
2. Use automated controls to catch mistakes and fight fraud
With 89% of fraud cases involving asset misappropriation, an automated expense process goes a long way when it comes to fighting fraud, especially if you are diligent. Determine if your procedure can withstand fraudulent behaviors and/or costly mistakes by determining which actions your organization uses to manage its shield of defense. Does your organization:
- Establish clear travel and expense spend guidelines?
- Require receipts for most, if not all, expenses?
- Require approval of expense reports before reimbursement?
- Have audit rules integrated into spend technology?
- Use pre-spend authorization to drive adherence to policy?
- Use reports to help spot problems?
If you checked all of the items above, then you’re on your way to fighting fraud. Survey respondents found a combination of technology, policy, and managerial approvals is the most successful way to manage employee expenses and compliance.
3. Use accumulated data to drive policy changes and adapt to changing regulations
Failing to adhere to industry regulations can come with bigger fines and even larger reputational losses. When asking life sciences respondents if they felt their company could potentially be at risk for global regulations and compliance, 57% answered “Yes” or “Not sure.”
By automating the spend management process, your organization can set controls and analyze spend data to review things like:
- Exceptions triggered by audit rules
- Incorrect usage of expense types or account codes
- Limit overages
- Approval activities
These insights allow our customers to make more informed, business-driven changes to their policies and programs in order to support their corporate goals.
Are you unsure that your organization’s solution for employee spend management has the ability to help safeguard you from violations? If so, it’s time to start acting as fines are devastating for those who aren’t compliant. For example, an organization can face Civil Monetary Penalties up to $1 million if it fails to report Open Payments in a timely manner. With all eyes on regulations, you can’t afford to be unsure.
4. Move away from manual spend processes
Automation and cloud technology are no longer out of reach, however, 42% of respondents reported that they still spend about 76 hours or more per month auditing expense reports. That’s 76 more hours per month that could be used to focus on revenue-generating initiatives and strategic business goals.
With automation and artificial intelligence (AI) on your side as part of an integrated employee spend management solution, your organization could:
- Reduce expense report errors by up to 66%.
- Shorten auditing time by as much as 90%.
- Thoroughly audit 100% of expense reports.
For more information on integrating controls to manage compliance and fight fraud, visit our compliance and fraud solutions website.