Although corporate CFOs appear most concerned with managing the expenditures of employees within the company and allocating budget resources to promote growth, even top level employees are not exempt from fraudulent activities. One of the more publicized cases in recent years involved Mr. Hurd, who had been a CEO for Hewlett-Packard.
The allegations that were faced involved an authorization of over $75,000 (US) for expenses involving travel for the owner of a third party contracting company. It should be noted that in contrast, actually employees who were contracted for the project saw considerably more frugal travel accommodations. What is particularly disconcerting is the fact that the expense approval came from a top level employee, which means that the accounting department could be bypassed. Fortunately, the use of expense tracking software alerted other CEOs to the infraction, and measures were taken.
The Extent Of Damages
Over the past decade, business fraud, especially through travel expense reimbursements, has increased by as much as 60%. The current reports from the Association of Certified Fraud Examiners state that general company losses in employee fraud account for 5-15% of the annual revenue. This is a significant amount that can be attributed almost entirely to the falsification of expense reports and the lack of adequate expense tracking software to monitor the expenditures.
Part of the issue does come back to issues with manual filing, which is not only inefficient, but also provides employees with more outlets to manufacture fake expenses. With manual expense report filing, addition errors can be frequently overlooked, and this creates a large gap that expense tracking software is able to fill. Automated verification and authorization eliminate theft through the reduction of these errors and through better documentation of actual receipts.
This type of theft impacts major companies as well as small businesses. The use of expense tracking software is becoming the standard for best practices, since this not only provides a failsafe for catching questionable authorizations, but it also generated reports that offer information on how the funds are being drained. Since new technologies like expense tracking software also make it more difficult for employees to falsify receipts, it can keep honest employees in better moral standing with their company relationship.