Companies of any size will at one point or another experience the sting of internal fraud. This can come from direct employee theft of manifest materials, but is likely to be the result of poor practices in reporting expenses and intentional padding or falsification of receipts. The problem that often arises is the fact that approval on these reimbursements may fall into a grey area where accounting departments either wittingly or unwittingly give a go-ahead for payment, without fully investigating what is being funded.
Receipt falsification is one of the greater concerns when reporting expenses for reimbursement is an issue. While cash receipts can present a greater problem for lack of a digital trail, even credit receipts can include extraneous and personal expenditures which are separate from the business expenses. This can cause extreme discrepancies in procedure even with existing measures for reporting expenses.
With automated processes in managing spending for travel and entertainment as well as other costs that employees will need in reimbursement, many of the efforts to maintain validity and verification can be strengthened. Reporting expenses through online submissions for approval and even scanning receipt information at the time of incidence can greatly improve the ability to monitor and catch fraudulent activity.
Another concern that most companies have is regarding internal fraud in billing in payments, which can negatively impact the organization as a whole. These issues can lead to investigations of an internal or external audit and can include factors like:
- Embezzlement through payments to “ghost” employees
- Invoice falsification, either through duplication on payments or overbilling
- Expense inflation for operational needs
This further supports the need for better means of reporting expenses and monitoring where these funds are going.
While automated programs for reporting expenses will still require human verification and approval, it also streamlines the process to provide a more concise overview of the spending and the reports. As a result, companies can not only better manage their budget, but can also enact preventive measures to provide a failsafe for these internal issues of possible fraud.