Expense reports are a pain. Employees hate filling them out, and companies hate wasting resources processing them. You may be tempted just to power through them and forget about them, but if you are not analyzing your expense reports on a macro level, you may be letting employee fraud go undetected.
Do you know what your business’ losses are due to expense report fraud? Probably not. According to the Association of Certified Fraud Examiners, the estimated median loss in 2014 was $30,000. It’s not a lot, but it’s still a decent amount of money. More problematic is what that loss represents for your company as a whole: your employees are stealing from the company.
Types Of Fraud
These are several of the most common ways in which expense report fraud is perpetrated:
- Claiming items used for personal reasons (hotels, gas, meals, etc.)
- Claiming items not allowed under company policy (alcohol, entertainment, etc.)
- Exceeding spending limits by splitting expenses into multiple line items
- Inflating cash expenses without receipts
- Double billing expenses by using a corporate credit card and seeking reimbursement
- Seeking reimbursements for canceled or refunded expenses
Your financial analysts can look at manual expense reports and find this information—eventually. The problem is that it takes too long. They need to manually enter the data from hundreds if not thousands of expense reports into spreadsheets or databases before they can properly analyze the data. When things get busy, those menial tasks tend to fall by the wayside. The Association of Certified Fraud Examiners estimates that the median duration of the fraud until discovery is 24 months.
With automated expense report software, all that expense report information is stored and organized electronically from the time the expense report is created. Financial analysts need only export the data and start analyzing.
For example, a common way to detect fraud is to check if any employees are expensing significantly more money than the average. With automated expense reports, this can be done within a matter of minutes.
Another common fraud scheme is double billing expenses by using a corporate credit card, and then seeking reimbursement for the same expense in a different expense report. Automated expense report software, can detect such duplicate transactions whereas financial analysts would have to sift through old paper reports and spreadsheets for hours to detect such a scheme.
The financial losses from expense report fraud may not be that great, but allowing employees to steal without consequence will have a much larger negative impact on your company over the long-term. With automated expense report software, you can detect fraud and put an end to it quickly.