CFOs and accounting teams face challenging tasks when managing expenses, especially when it comes to uncovering places in expenditures where funds are being leaked. It is important to recognize that this can result from two very different factors which impact the company. Depending upon the actual cause of lost funds, however, the result could be as severe as criminal charges.
Mistakes Do Happen
Mistakes in accounting, especially with manual expense forms and reports are exceedingly common. Lack of automation for managing expenses can further contribute to this, since manual systems require direct access for inputting data. Along with mistakes which are simply not caught, negligence in the attention to details in managing expenses also contributes to these losses continuing.
Negligence is not always intentional, although it does speak of a poor work ethic. In companies where budget cuts have led to less administrative and operational support, this negligence can also be the result of employees who are overworked and on the verge of burnout. The problem is that while negligence may not be intentionally harmful, it can still result in discrepancies of accounting which can lead to a full audit.
Meaning To Do It
Conversely, internal or employee fraud differs in that the intent is to make personal gains from company funds. While this is an active attempt to commit theft, in manual documentation, it can also appear as a possible mistake in managing expenses. The result of discrepancies and an audit are still an outcome, but further investigation into criminal charges is also the outcome.
In some companies, there is very little leeway for poor accounting, and regardless of whether it is negligence or actual theft, the employees in question get let go. However, the use of automation in managing expenses minimizes this possibility, and thus protects the company as a whole, as well as individual employees who are working hard at accurately managing expenses.