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The rise of the fraudster: internal expenses

19th Apr 2016
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The focus of this two-part blog series is on the rise of the workplace fraudster. First up: the increase in internal expenses fraud. Next month we’ll focus on external invoices.

Working in finance, it’s a given that you’ve come across some questionable expense claims that you perhaps haven’t given as much attention to as you should. With many other tasks taking priority expenses can often be left behind as many companies adopt a more lenient approach to the expense process.

I’m not suggesting the rise of expense fraud is something new – it’s been an issue that businesses have had to deal with since expenses as a process began. But in an age where transparency and compliance are becoming more and more crucial, businesses are being put in the spotlight, despite the increasing number of assistive tools and technologies. So why is this still such an issue?

Statistics from a YouGov poll show that 20% of employees think it’s acceptable to exaggerate expense claims – that’s one in every five of your employees. This shocking statistic should make the ears of finance teams prick up. Moreover, this issue is set to become an even more pressing one, as the poll found younger generations were even more inclined to think it’s normal practice than older generations.

Unfortunately, finance teams are often overburdened and, in the grand scheme of things, a questionable expense claim is not top of their priority list. Yet due to recent high-profile MP expenses scandals and an increased focus on HMRC tax compliance , finance teams are urged to analyse their current process and identify room for development.

So why are we seeing a rise in fraudulent expense claims?

To my mind, there are a number of reasons. Firstly, people get away with it – you can buy books on Amazon on how to pad your expense report. The more people get away with it, the more they will do it. How many managers actually review what their team puts through on expenses? At best most line managers give the document a glance and approve the claim. Companies lack any tangible way of tracking or linking the invoices that come into their company and the expenses that go out of it. This leaves the process open to manipulation.

This brings me onto my second reason: many finance teams lack real-time visibility into their data – meaning they cannot spot questionable behaviour. For example, if you’re still relying on Excel spreadsheets you’re making it easy to abuse the process. If the way you manage expenses hasn’t moved on since the 1970s, the chances are that the culture of “oh I’ll slip that receipt in from Sunday lunch the other day” probably still prevails too.

Finance teams need to move towards a fraud security culture. In essence, this comes down to three key elements: a clear best-practice policy, good governance and aligning your systems in order to create the real-time visibility needed to spot any dubious activity. This will ease the to-do lists of finance teams giving them one less thing to worry about, prevent confusion and make it trickier for employees to look for a workaround. 

Dafydd Llewellyn is Managing Director UK SMB at Concur


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