How to Minimize Expense Report Fraud

Published June 10, 2015
Minimizing expense report fraud

Employee theft is a significant issue for businesses. The Association of Certified Fraud Examiners estimates that expense report fraud comprises approximately 15 percent of corporate fraud today. A well-designed expense submission process that's backed with a robust online expense reporting software package can help prevent, detect, and prosecute different instances of employee fraud. Here are four steps any business can take to help minimize the occurrence and impact of employee expense report fraud to their bottom line. 

Establish a Clear Expense Policy

Establishing a clear expense policy is essential to gathering a baseline on spending, compliance, and monitoring. An expense policy outlines acceptable expenditures, expectations around reimbursement procedures, and limitations related to certain categories of expenses. Once a policy is in place, document it clearly and educate all employees on the guidelines. An online expense reporting program allows companies to automate spending management by setting limits and rules that immediately identify expenses that are in violation of company policies. Each questionable submission is flagged to employees for another review before submission, and then immediately escalated to the appropriate manager for review and response. Using technology to reinforce a well-designed expense policy can help screen and even discourage fraud.

Check for Trends

An analytics system is essential for minimizing expense report fraud. Evaluating spending trends that could signal a problem is much easier when companies use online expense reporting software. Analytics capabilities make it possible to look at ongoing trends at the company level, department level, project view, or even drilling down into spending patterns for an individual employee. It's easy to quickly recognize problem patterns in the data, from higher than normal expenditure levels for certain positions to non-allowable expenses. Managers or accounting staff are then able to access documentation, request clarification, or take stronger action if the situation warrants.

Require Receipts

Expense report fraud is easier to perpetrate when businesses don't require receipts. Whether it's a cash expenditure or an unsubstantiated corporate credit card expense, it's important to have documentation on hand that clarifies what, where, and why an expense was made. Companies take different approaches to requiring receipts, based upon their needs. Some businesses require a receipt for all expenses; others require documentation for expenses above a certain threshold. Online expense reporting makes it easy to scan and submit receipts, which allows accounting teams to maintain detailed documentation while minimizing paper management.

Utilize Online Expense Reporting Technology

Using online expense reporting technology is the easiest way to identify and prevent common expense reporting issues and methods of employee fraud. For example, one common approach to employee expense report fraud is submitting duplicate expenses. Another is exceeding the limit for certain expenses, or working around limits by breaking larger purchases into multiple smaller submissions. Online expense reporting technology simplifies the process of identifying anomalous expense submissions that could signal a problem. Instances of employee fraud are more likely to be caught, while managers and accounting staff can spend less time on administrative sleuthing.