The Evolving State of Expense Fraud

The Evolving State of Expense Fraud

Despite all the advancements in expense management, whether it be through technology or process, expense fraud is still a prevalent issue around the world. But why is this the case? According to the Association of Certified Fraud Examiners (ACFE), 14% of all occupational fraud and abuses cases is one form of expense reimbursement fraud, the third most common type of fraud and one of the easiest to hide from the company.

Many companies believe that they employ trustworthy and honest people, but the reality is that anyone is capable of fraud. In fact, some employees may submit fraudulent expenses without ever being aware of it. But the real problem stems from those who knowingly defraud their employers, and the strategies they use to go unnoticed. Employees that are committing expense fraud often go with the “little and often” approach, making smaller fraudulent claims along the way, that eventually add up to a significant amount.

All expense categories are susceptible to fraud, but one of the most exploited travel expense categories is mileage reimbursements. It is quite easy for travelers to inflate the distance traveled for trips, and most times, accounting departments and managers will not scrutinize expense reports over miles if it seems within reason for the trip. While these excess charges may be minimal at first, over time they can add up, and when this type of activity is commonplace in an organization, it can be massive.

Now, while the strategies that less than scrupulous employees are using have become harder to detect through manual processes, the technology has also improved. The rise of automated expense management platforms has allowed managers and accountants in the expense review process to dive deeper into expenses. With these advances in technology, fraudulent expenses can be more easily identified and rectified through policy enforcements, spending category limits and trip authorization protocols.

Furthermore, for issues such as mileage reimbursement, some automated systems will allow for automatic mileage calculation. This feature requires the user to plug in the trip destination and automatically will set the total trip miles and reimburse based upon that set trip distance. Fraud in the workplace will always be a game of cat and mouse, but as the technology continues to advance, the ability for employees to take advantage will continue to be limited.

If you would like to learn more about how Certify can help you cut down on fraud in your organization, click here.