Averting businesses expense fraud in the new normal

Currently, when we are in the hybrid mode of working, it is important for any organisation to detect and control the expense fraud within their system.

Averting businesses expense fraud in the new normal
Organisations need to understand the root cause of the problem and how that can be addressed immediately. (Representational Image)

By Ben Price

Expense fraud, which basically means a deliberate, devised attempt at inflating business reimbursements, is one of the most overlooked types of fraud and entails a staggering cost for companies. According to the ACFE Global Fraud Study, 5% of a typical organisation’s annual revenue is lost due to such fraudulent activities. With time, especially in the Covid-19 era where liquidity matters that most, it has become a matter of concern, and is impacting the business operations.

Travel and other related expenses have declined since COVID-19, but fraudulent use of the expenses has raised the ire of every organisation. Expense frauds are often highlighted through a routine audit check when a mistake gives rise to a suspicion. The situation has created the need of continuous assessment and monitoring. With growing number of standards and compliances, the need to integrate the right technology to detect and prevent fraud has become even more crucial. A relaxed approach or negligence will lead to a huge loss of organisation’s revenue. Hence, when organisations talk about managing costs, the focus must include on locating the source of the fraud which can not only impact the financials at that point but will create a future roadmap to ensure seamless transactions without being hit.

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Currently, when we are in the hybrid mode of working, it is important for any organisation to detect and control the expense fraud within their system. A recent study by SAP Concur reveals that 48% of the employees believe it’s fine to over-expense or disregard company expense policies at least once a year. This can lead to increased fraud, leading to huge operational cost. The situation can easily be managed by adopting some measures which can be implemented across the departments. However, not every case of fraud is intentional.

In some instances, it comes down to not understanding expense policies. Due to lack of proper analytics and tools, it becomes difficult for any organisation to track such frauds. Such instances originate where spends are not compliant with the policies and standards. A deeper analysis is needed to determine what the possible cause of the fraud may be, rather than only looking at key exceptions.

Introducing a unique expense policy

Organisations need to understand the root cause of the problem and how that can be addressed immediately. Here, the first step is to create a unique expense policy, to be adhered by the employees. Absence of a solid expense policy framework can lead to multiple violations. At the same time, it is important to update the employees of such policies.

A vital step is to update the employee through all the channels being used within the organisation, not restricted to an email. In addition, announcements and dedicated training sessions are equally important when there is any modification to the existing system. This will prevent them from filing out-of-policy expenses and curb unintentional fraud. Organisations also have a liberty to enforce the policy at the time of filing the expenses.

Real-time check through automated process

The next step is to automate the expense management process, which can help prevent fraud in real-time and address policy compliance issues. It also makes the expense filing convenient for employees by eliminating errors which occur while filing manually. With the help of a technological service provider, organisations can also design a thorough expense review and approval process for 100% audit capability.

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Organisations should remain diligent in the efforts to increase visibility and control over fraudulent expenses. A well-defined policy can clear all doubts that employees might have regarding the expense reporting process. As a result, organisations will save oodles of time in not having to answer queries regarding expenses to employees and dealing with violations. With many faulty expense claims happening by human error, it has become a challenge for smooth running of business. However, choosing to embrace with emerging technologies, there is huge potential for change. New tools and solutions available in the market, pertaining to artificial intelligence (AI) and possibilities to shift mindsets, the ways can ease the burden and prevent further loss. The process will also minimize the unnecessary paperwork that goes around for existing approval processes.

(Author Ben Price is the COO, SAP Councur, APAC. The author’s views expressed are personal and do not reflect the official position or policy of the

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