Expense Report Rx: Steps to Stop Fraudsters In Their Tracks

Expense Fraud

Expense report fraud is likely a problem you know exists but tend to minimize. It starts small but grows. And unless you have the right controls in place, it can cost you—a lot. According to global financial advisory firm Stout Risius Ross, an estimated $1 billion is lost each year to fraudulent expense reimbursement.

Just how big of a problem is expense report fraud? Read What Expense Report Fraudsters Don’t Want You To Know.

Fortunately, there are things you can do to minimize this expensive form of trickery at your company. Focus on these tactics to keep employees on the same page and gain control over your expense report process…before it’s too late:

Implement a Formal T&E Policy

A clear, up-to-date travel and expense policy is the backbone of fraud prevention. This document details what expenses qualify as reimbursable and what you can expect by way of expense documentation and submission deadlines. It also outlines the consequences for non-compliance and eliminates gray areas for employees and managers who are reviewing and approving expense reports. See 4 Must-Haves For A Winning Expense Report Policy for inspiration.

Effectively Communicate Your Policy

Keeping your T&E policy in front of employees at all levels can help you minimize oversight and even reduce unintentional policy misuse (do the weekly burrito runs really qualify for reimbursement?). It also helps build a “culture of compliance” within your organization, sending the message that integrity and honesty in all activities is expected—and that employee company-dollar spending behavior is, in fact, being monitored.

Hold Managers Accountable—All of Them

Think of management as your first line of defense in the war against fraudulent disbursements. Those in the approvals chain should be discouraged from blindly OK-ing expense reports—and should be empowered to ask questions and take action if they stumble upon a suspect expense. They should also be a primary driver of frequent T&E policy reviews with employees in their charge.

Keep in mind that expense reimbursement schemes are most frequent in executive/upper management, according to the Association of Certified Fraud Examiners’ 2014 Global Fraud Study. It’s not that members of the C-suite are “untouchables,” but they often have the access and authority required to skirt the system. This means that careful documentation reviews need to take place—and be enforced—at all levels, and ideally, by multiple sets of eyes.

Audit Past Expense Reports

On a regular basis, especially in the beginning of your fraud-minimizing journey, review a handful of past expense reports. Take note of suspicious out of pocket expenses (i.e. those with missing receipts or categorized as “miscellaneous”), look out for duplicate transactions (two employees expensing the same client lunch, for example), and identify any flat-out fictitious transactions. Aside from giving you insight into employee spending patterns, you can gain useful intelligence on weak spots in your T&E policy and reimbursement process. Even if everything looks on the level, you might uncover opportunities to better communicate policies with your workforce.

Set Limits on Corporate Cards

Don’t forget that most corporate credit cards enable you to define where, when and how much a card-carrying employee can spend. If you’re not taking advantage of these controls yet, it might be time to look into it. Setting parameters can help you in with T&E budgeting and forecasting while keeping employees’ spending in-line with your policies.

Automate Your Expense Reporting Process

Not only does software take the manual hassle out of the process for both employees and administrators, but it comes with built-in controls that make enforcing policy complying easier. Solutions like Nexonia Expenses are tailored to your company’s specifications, from custom expense categories and documentation requirements to approval chains. They reduce the risk of fraudulent expenses slipping through the cracks by flagging expenses that don’t fit into configured parameters—like a charge made at a theme park, for example. Plus, corporate credit card integrations and tools like receipt image capture help streamline expense report transaction matching where manual, human errors can create snags.

Learn about how Nexonia Expenses can help your company make expense fraud a concern of the past – book a customized online demo.