3 Ways To Check Expense Frauds

Jan 17, 2018 11:47:31 AM

Your organization processes a hoard of reimbursements on a monthly basis, and you approve almost all of them, barring a few. These few expenses are usually the ones which have out-rightly violated your policies or don’t have appropriate bills attached. 

But what if your employee is claiming reimbursement for fictitious expenses or inflating expenses while reporting them? That sounds ridiculous, right?

Most admins feel that their organization doesn’t provide any room for expense frauds. If you’re one of them, I am sorry to break this to you but that might not be true. According to the 2016 survey of the Association Of Certified Fraud Examiners, the business world suffered $6.3 billion in corporate fraudulent charges. Though the major fraud scheme involved botching up financial statements, asset misappropriation and employee corruption followed closely.


Traditional Expense Management Promotes Fraud

Coming back to employees claiming non-existent expenses or inflating incurred expenses - We are forced to ask ourselves that how can such a practice occur in our organization?

The answer may lie in the way expense management is handled in a majority of organizations. In the barrage of monthly reimbursement claims lie hidden a few fraudulent expenses which often go unnoticed by the admins. But how do such claims go undetected?

A major reason can be the sudden onslaught of expense reports that an admin receives at a particular time in the month. With tight deadlines and hundreds of reports to process the lone warrior often finds himself or herself beneath reams of paper reports. The warrior’s single most important task being to verify legitimacy of reported expenses using the attached receipts.

We do know that even the best of warriors fall when outnumbered (remember Leonidas) and battling expense reports is definitely a tougher job . So I wouldn’t blame your admin if he accidentally overlooks a few fraudulent expenses every month.


Nipping Expense Frauds In the Bud

In traditional expense management fraudulent claims are conjured up by employees but they remain undetected by the admin. Thus, we can safely assume that in such a process detection of fraud relies mainly on the vigilance of the admin, which will vary given that the gatekeeper is a human.

But think of automatic doors which use IR sensors, they have eliminated the use of a human gatekeeper. You can keep playing with them but they rarely fail, that is the single most important use of technology, automate boring tasks and allow previously bored humans to achieve tougher challenges. 

If we want to check expense frauds at source the following ways might be very effective.


1. Use an Expense Management Software

Automating expense management using a software can work wonders in reducing expense frauds. An expense management software allows your employees to report expenses on-the-go and tracks all your paper receipts in one place for quick audit. With the help of such a system the window for fraud reduces drastically. The upside of using an expense management software is that the software can detect duplicates or fraudulent expenses without the need of manual supervision. If an expense management software is using Artificial Intelligence it has the capability to flag potentially fraudulent expenses and mark them for review by a human supervisor.


2. Enforce Comprehensive Expense Policies

A major reason why employee expenses vary over the month and also within the same function is the lack of a rigorous policy framework in place. With ambiguous and unenforceable policies employees are often motivated to conjure up frauds. The presence of an already burdened admin helps too as the employees can sense the helplessness of the poor guy. Defining clear policies around various categories of expenses will bring transparency in the organization and reduce the instances of frauds. With an expense management software such expense policies can be enforced in real-time while employees report expenses. This completely eliminates opportunities for fraud.


3. Simplify Approvals For Expense Reports

An often overlooked part of the reimbursement workflow is gathering approvals from concerned managers. Approvers dread expense reports and seldom do they review expenses with the eye of an auditor. This lack of scrutiny on the manager’s part is again overlooked by the admin who trusts the judgment of the approver. Thus, a clumsy approval workflow facilitates the chances of a fraudulent expense claim to get reimbursed.

Instead if the manager’s entire approval workload is spread over the month not requiring him to go through all reports at once then he can do the work more effectively. Using an expense management software admins and employees can request a manager to review a report and approve the same at any time. The manager approves without having to interact with the stakeholders in person.


Save Money For Your Organization

You don’t have a doubt that expense frauds are costing you money which could have been put to use somewhere else. If you wish to save money while easing the pain of expense reporting for your employees then an expense management software is the best bet for you. 

We at Fyle, have come up with the perfect solution for expense management which is lightweight for users to use while being able to handle complex organizational policies. Our users have loved us because of the powerful expense management features Fyle provides while retaining the intuitiveness of a native mobile app.

If you want to witness how Fyle is able to detect duplicates and flag other expense frauds, then please request a demo with us and our customer champions will reach out to you at the earliest.

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