One study conducted in 2014 by an auditing and expense management group took a three month look at over 160,000 employees traveling and filing their expense reports. The results at the end of that period were surprising. While it was discovered that the majority of workers conducted themselves with professional ethics and honesty, $13.7 million dollars in fraudulent expense reports were also discovered in just one three month period. Taking that same figure an extrapolating it over an entire year, with more employees would result in a sobering figure.
Fortunately, there’s one reassuring number that comes out of this study. Of the employees that were tracked for expenses during travel, nearly 94% filed their report honestly and within the compliances set by their individual companies. Of course, the flip side to this is that only 6.3% of the people that fell out of compliance for filing expense reports were responsible for that $13.7 million that was fraudulently reported.
Many of these reports, even though they were technically categorized as fraudulent, because of the false numbers involved, could be blamed on error. But of the fraudulent reports that were the result of deliberate deception or exploitation, 82% of those reports were filed by a tiny fraction. In other words, of the 6.3% of people that fell out of compliance for filing reports, 5% of that 6.3% were responsible for 82% of the deliberate attempts at false expense reporting.
This means that they simply committed the same fraud over and over again, unaware that their actions were being monitored by an outside group.
Automation Is A Watchdog
While no system is 100% foolproof, an automated expense report system, like ExpensePoint dramatically reduces the amount of fraudulent expense reporting in a number of ways. Because expense reports can be filed as they happen, the information is available to accounts and finance people the moment it is entered, meaning they can verify reports immediately rather than waiting until the end of the month to go over all the financial activity of a company.
With automated expense report software, policies can also be configured within the software itself, so that any expense report made that falls out of compliance with a company’s limitations can be immediately flagged and the relevant staff can investigate, verify, approve or decline it. Thanks to the analytical functions of the software, it is also possible to look at the “big data” and see how company travel expenses are being used, making it much easier to track down these individual repeat offenders without needing to exercise a blanket policy that hamstrings honest employees as much as it does the actual problem employees making fraudulent reports.
Fraud is a serious problem for any company to face. But new technologies and better automation are making it easier than ever for people to understand how the finances in a company are moving, and more accurately track where some unethical employees are trying to exploit the system for their own ends. ExpensePoint is one more tool your company’s arsenal to fight this.