In-House Expense Management Uncovers Unexpected Losses

In-House Expense Management Uncovers Unexpected Losses

In-House Expense Management Uncovers Unexpected LossesEvery business owner is concerned about places in the budget where undue losses may be happening. There are cases where this is simply an aspect of the current economy or of internally approved spending trends that need to be revised. However, accurate expense management for companies of any size is always appropriate and can help to uncover employee fraud that results in substantial costs.

One major electronics retailer recently experienced both small scale and large scale embezzlement issues, which could have been avoided with better expense management. What is interesting about this case is that while both instances where direct employee theft, they also occurred at different levels within the operation.


Keeping Track Of All The Pieces

The large scale fraud ended up having a considerable impact on this company’s stock prices, since the party at fault was in top corporate management. While the business did suffer direct financial losses from this embezzlement of funds, it also went through a reduction in business from customers. This further compounded the results of the actions, and led to a considerable rebranding of the company.

Business owners can have a tendency to believe that employee theft of funds is purely in the realm of larger corporations, especially as the sheer volume of personnel can make it difficult to fully monitor spending and engage in accurate expense management. However, this same company also suffered in-house losses at specific retail outlets, due to employees who were using the ordering system to duplicate transactions and then return the dummy transaction in order to pocket the profit.

What need to be noted about this situation is that while large scale embezzlement was happening at top levels of the company, the smaller scale theft still measured in the hundreds of thousands, and the impact was directly felt by that retail outlet. It is also important to know that the outlet incident happened with a formerly trusted manager, who was actually responsible for the expense management in that store.


Vigilance From Many Angles

Fortunately, both the company and store level manager where charged for these infractions. On the smaller store level, this happened after a member of the loss prevention team noticed the discrepancies in the orders and followed up by tracing the paperwork through the system. While the company level theft was eventually uncovered by corporate accountants, better expense management on both levels could have resulted in less of an impact on the company.

The generation of reports that show spending over a number of channels does facilitate better expense management, since it provides a more consistent overview of practices. It also gives authorization for specific members of the business to have access to this information, and it is through better disclosure of financials to management teams that these incursions can be uncovered.