T&E Fraud: Alerts, Trends and More in 2018

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In the past, before the introduction of comprehensive and highly advanced software and technology, many companies were pretty worried about travel and expense fraud. How do they feel now?

Recently, the expense claim software company Chrome River published an article pointing out the fact that new technology and tools aren’t eliminating T&E fraud, but they’re reducing the concern and fear on the part of employers. This is because when employees are trying to rip off their employer, they have the tools to let them see it quickly before it spirals into something bigger.

The following are some things to know as far as the alerts, trends and other patterns in T&E fraud.

Fraud at the Government Level

One of the reasons that T&E fraud remains such a pervasive topic of discussion, even in the face of advances in detection technology, is because of the fact that it happens at the governmental level. In the spring of 2018, one of the many governmental expense scandals that came to the forefront occurred with Scott Pruitt.

It came out that Pruitt while heading up the Environmental Protection Agency, had a massive budget for security. Pruitt was paying his large security team for protection even while he was on family vacations.

A member of the EPA signed off on allowing Pruitt to fly first-class on commercial flights, and the security chief would usually also join him. He got access to VIP airport lounges as well, and all-in-all his travel costs went up substantially.

According to the EPA, total security costs were approaching $3 million when pay is added to travel expenses.

The Costs for U.S. Companies

In the U.S., according to research from Chrome River, expense fraud costs companies around $1.9 billion annually, and the people who are most likely to be offenders are mid-level employees. Of those mid-level employees, men under the age of 44 are the most common T&E policy violators.

Sometimes the problems related to T&E aren’t necessarily fraud but are errors. However, there are those people who have much more malicious intentions.

Employees admit to stealing on average anywhere from $100 to $499 a year, and when they get caught, they reported they would usually receive a warning instead of more dire consequences.

It’s often found that when people do take the risk to defraud their employer, they’re doing it for such small amounts despite the possibly immense consequences. Because of automated expense management tracking, the puzzling fact is that people will be less willing to sacrifice so much to gain so little in return.

The Role of Artificial Intelligence

While expense management has already come leaps and bounds in recent years in terms of fraud detection, there’s probably a lot more on the horizon according to people in the industry. There is a lot of focus being put on improving and advancing artificial intelligence. This would mean that expense software would be able to do calculations and make predictions that could even more easily be used to spot fraud.

For example, with the development of more artificial intelligence capabilities in expense management, it might be possible to look at the spending of employees as compared to the average spending of other employees in similar positions and see how it compares.

What Remain the Most Common Forms of Fraud?

While employees might become less willing to commit fraud in the age of technology, that doesn’t mean it’s eliminated.

Some of the most common things that finance teams should still look out for are usually related to “double-dipping.” For example, are employees having multiple meals a day as a way to submit card charges as well as requesting reimbursements?

Some employees also book multiple hotel rooms that they’re not going to use as a way to get more rewards points from the company, or they may have duplicate receipts they submit.

Something else noted as a potential issue by CFO Daily News is booking multiple flights. According to the article, employees might have a trip date that changes after they’ve booked a flight. The employee then books an entirely new flight rather than changing the original flight, and they then have a free airline ticket.

The same CFO Daily news article does go on to say that as 2018 is coming to an end, it’s the time that businesses are most vulnerable in many ways. This is because employees are working to close out any expenses they still have open and this can be a busy time that leaves opportunities for people who want to commit fraud.

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