A 2014 study by the Association of Certified Fraud Examinersfound that upper management accounts for close to 30% of reimbursement fraud cases. It doesn’t take a Harvard MBA to know that behaviors (good or bad) that are exhibited by top managers will eventually be modeled by employees. Couple poor behaviors by executives with lax expense reporting procedures and you have a recipe for systemic expense fraud in your organization. Whether you’re currently dealing with this situation or seeking preventative expense controls, you can take steps now that will help crush expense report fraud in 2015.
SET AN EXAMPLE AT THE TOP
If employees regularly witness key executives padding expenses, they will likely follow suit. If executive expense fraud is an issue at your organization, you’ll need to take strong and decisive action that may include termination of repeat offenders. Management needs to set a culture of responsibility at the top so it will cascade down to the rest of the organization.
MAKE KNOWN YOUR EXPENSE REPORT POLICIES
The size and complexity of your organization will dictate your expense report policies. You should identify as many expense reporting scenarios as possible. If you have an internal corporate website, you should provide a prominent link to your expense policies for your employees. Otherwise, a hard copy of the policies should be given to the employee to review and sign as a condition of employment.
PUBLISH YOUR EXPENSE APPROVAL PROCESSES
Be sure your employees are aware of the expense approval business processes and other relevant business policies. International employees may have separate country or project approvers as well as additional reporting requirements. Onboarding for projects should include a review of any project-specific expense reporting policies.
GIVE IMMEDIATE EXPENSE FEEDBACK
Your employees are not going to consult your expense report policy when they enter expenses. Your expense management software should have built-in rules that can automatically identify expense entry violations so that it can be sent back to the employee for additional information while the rest of the report can be approved for payment.
USE PREDICTIVE ANALYTICS
Use predictive expense analytics to understand expenses and employee spending trends. These trends will alert you about possible fraud and they can also show areas where you have opportunities for potential vendor discounts.
Take steps now to help conquer expense report fraud in 2015.
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