How to prevent expense reimbursement fraud?
The HR Manager of a leading sales & distribution firm Mr. Alex is stunned with the recent findings presented by one of the Accounts staffs. Several employees have been found to forge the expense reimbursement which can be seen in naked eyes. In most of the cases amount has been already paid. He reported the issue to the director and then a formal investigation had been set up to find out such occasions in the last three years. Alex is not only the one who is facing such issues in recent times, as in most of the cases valuable and trustworthy employees found to be a perpetrator.
As per the ACFE's 2016 Global Fraud Study research shows expense reimbursement schemes accounted for 14% of all asset misappropriation scams, across all industries. The question that arises, is there a way out for organization to control such undesirable behavior of employees. Until organization adopt technologies that help them to measure and quantify the spend, such cases of fraud will continue to happen.
Trends in expense reimbursement fraud:
There can be various fraud practices prevailing in an organizations such as,
- Claiming for expenses that never took place i.e. traveling using public transport but billing for taxis.
- Falsely infiltrating the amount on the bill.
- Employees claim for their personal expenses like gas, food, hotel, travel, etc.
- Multiple employees colluded among themselves to travel together but applying the same bill to claim the expense more than once.
- Asking for mileage reimbursement after few months of the date of the journey, while the actual travel reimbursement is already done.
- Sometimes trends of violation can also be found where employees use a first class instead of the economy, claims for meals including alcohol or multiple people.
What can you do to prevent expense reimbursement fraud?
Automation of employee reimbursement process:
Managing the expenses manually lacks transparency and is prone to error. Automation of the expense reimbursement process helps in enforcing internal control and establishing a process across the organization. The process from approval to reimbursement of expenses becomes systematic. Expense information for any employee is easily accessible anytime from anywhere.
There could be nothing better than an automated expense management solution that helps organization to enforce corporate policies and prevents violation of the same by alerting the employees.
The approver must ensure that the claim adheres to the corporate policies before approving them. Multi-layer approval ensures enhanced monitoring and control. Manually maintaining such a process becomes almost impossible but with an expense management solution it happens in just a few clicks. Automation helps in sending quick mails and notifications to approver and employees related to expense claims.
Tracking and monitoring:
Every expense of an employee should have a unique expense code to keep a track. Expense management solution can help in providing insight of expenses, employee, department, category and time wise. Any unrealistic or duplication of expenses can be easily identified using automated expense management solution. Through analytics, expenses made on the same day, month, purpose can be reviewed and cross-checked.
Lead your employees:
According to ACFE report, senior officials account for nearly 24% of all cases of employee reimbursement fraud at an organization. The senior officials must set an example of having honest approach in their reimbursement process that can indeed influence the employees to follow the lead.
An automated expense management solution can help any organization to be systematic in the expense reimbursement process. Automation of the entire process helps in maintaining all records with enhanced transparency. It also increases the convenience of the employees as they can upload their bills, get approval and receive reimbursements. An act of fraud is unacceptable, opening avenues for fraud is also equally unacceptable. In this fraud awareness week let us join hands to remove expense reimbursement fraud by adopting expense management solution for your organization.