Putting the Spotlight on Expense Report Fraud

Recently Concur put out an article about “Putting the Spotlight on Expense Report Fraud”. Here at BTS we get asked the question all the time, is fraud really an issue. Concur puts it like this:

People don’t want to talk about it. Companies don’t want to admit they’ve got a problem with it. We’ve heard from some employees they know they have “massive amounts of it” in their organization. But for companies large and small, expense report fraud remains a dirty secret.

Expense report fraud actually accounts for 15% of all reported fraud (other occupational fraud includes corruption, financial reports, billing, accounting, etc.). And all types of industries experience fraud, from banking and financial to technology, manufacturing, government, nonprofit, education and healthcare. In other words: it happens in pretty much every industry.

Concur is no small business and they have information to back up their statistics so the reality is, fraud is out there even if no one really wants to admit it in their company. But its real and its costing U.S. business millions of dollars every week.. Fraud can range from something as simple as eating a candy when stocking the shelves to stealing money from the corporation by padding an expense account.

Lynn Hamper the idea person behind BTS and has spent more years than she will reveal working with businesses and helping to identify and stop fraud. What does a company do about fraud; just let it happen, raise prices to cover it? How about stopping it! Everything must be balanced. Most companies are worried that they will spend $100 to find a $5 issue. So they figure, it isn’t worth it. The reality is that this is exactly what the fraudsters are hoping you will think.

Lynn’s Tips

Here are a few friendly tips from Lynn to help take the first step:

1. Work with travel and expense groups that are willing to send you reports in an easy to read format.
2. Find out what fraud prevention services might already be available to you if you ask.
3. Talk to your accounting team to figure out problem areas such as:
   • are receipts turned in on time
   • are they complete
   • how accurate are the expense reports
   • do your expense reports actually collect all the info you would need to catch a fraudster
4. Most important, get real, if you have a successful business you are as much a target as the person walking down a dangerous street with a million dollars hanging from their pockets.
5. Fight back

Procurement & Expense Cards VS. Airline Ticket Fraud?

What if anything does expense and procurement cards do to stop fraud? The reality is that these type of cards help a company with… procurement. The main focus of these cards is accounting - tracking and controlling spending. This limits the ability for an individual using the card to use it outside company policy. However, any company with these processes will tell you that even with total spending limits, dollar limits and specific merchant categories, issues will still arise. The reality is that if there is a gap in the process there is room for fraud and travel is still a gap in the process.

BTS focuses on the travel fraud area. The simple reason is that fraud in this area is not based on the purchasing process, although that is a factor; it is focused on activities concerning air travel. Many of these activities are untracked – a fact which fraudsters are well aware of and skillfully able to exploit.

Take a public statement from one Procurement card group:

Here are just a few of the advantages you gain with a _________ card:

• Streamlines purchase and accounting processes by eliminating purchase orders, invoices, and checks.
• Improves management reporting so you can analyze spending data by expense type, Merchant Category Code, geography, and more.
• Ability to monitor compliance with spending policies and purchases toward negotiated volume thresholds.

This is a great tool, it lets me see almost all of the money transactions and set all sorts of limits. No argument there, but what happens when the fraud activity is not targeting money, what if they are targeting services or unclaimed tickets? BTS can look for and track these activities because it isn’t focused on the $$ although it will find that too. How would one do that you might ask… we won’t discuss that here, no use giving away trade secrets or giving the fraudster’s any ideas.