According to the most recent and loftily titled “Report to the Nations”™ from the Association of Certified Fraud Examiners, each instance of expense reimbursement fraud costs $40,000 in loss on average and takes 18 months to detect. Further, this type of occupational fraud accounts for 17% of all occupational fraud schemes in the United States. So, yeah. It’s still a thing.
What is expense reimbursement fraud?
What is expense reimbursement fraud? Broadly speaking, intentionally mischaracterized, overstated, or fictitious expenses fall into this category. Received wisdom says, “build and publish a robust expense report policy, and everyone will fall in line.” After all, we trust our employees, right? Of course. But as Ronald Regan said, “Trust but verify." As such, we are told to back up that policy with multiple layers of manual approvals, onerous documentation requirements, and periodic audits. Unfortunately, these steps happen days, weeks, or even months after the transaction. That's like closing the barn doors after the horse has already escaped.
How to reduce expense reimbursement fraud
It’s time to move beyond the backward-looking approach of “policies and audits” and into the modern system of real-time controls and visibility. Should you publish an expense policy? Absolutely! In addition, you should take steps to
Stop potential fraudulent or out-of-policy transactions at the point of sale.
Speed up your reconciliation process to spot anomalies.
Unfortunately, traditional corporate card programs don't support these steps. However, they are fundamentally part of the problem. Your corporate card program should allow you to do the following:
Access spend data at the time of transaction.
Set budgets by individual and group per period.
Specify which or what types of merchants are allowable and block those that aren't.
Place geographical limits on purchases.
Disable or pause a card immediately due to suspected fraud or loss.
Doing so will give you up-to-the-minute control over, and insight into spend coupled with nearly instant reconciliation.
What control and visibility look like
No system or process is 100% fraud-proof, but you can begin taking steps to protect your company from expense reimbursement abuses. Contact Speedchain to learn more about the real-time controls and visibility of your corporate card spend.