How to Prevent Fraud and Enforce Global Policy Compliance
The more global your business becomes, the more difficult it is to keep an eye on every dollar and every person who has access to the corporate coffers. And with seemingly daily changes to the regulations that govern your business—in addition to the changes to your business itself—keeping an eye on your spending and keeping up with policies and procedures can seem virtually impossible.
How do you know what to audit? Or how often? Or which departments or budgets or teams or individuals? How do you discern between mistakes in the numbers versus manipulation of the numbers? How do you keep track of T&E when your travelers and suppliers are thousands of miles away and constantly on the move??Here's how to gain the?upper hand in the ongoing balance between auditing and uncovering fraud.
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Would you rather fight fraud or prevent it altogether?
As you consider audits as a tool to prevent fraud, it’s important to recognize the difference between real fraud and the appearance of fraud—simple mistakes. These are things people do accidentally, not intentionally, but which still impact financial health. By following these tips, you can learn how to identify those instances, as well as discover a few fraud trends that may surprise you.
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Mistakes happen.
The majority of people who work for you don’t intend to commit fraud. But sometimes, they accidentally enter a dinner receipt twice on their expense report. In fact, according to an , 37% of business travelers had at least one exception on the T&E reports. And, it's estimated that?the typical organization loses 5% of annual revenues to fraud each year.
Catching these mistakes and, more importantly, making it easier to avoid these mistakes, enables you to highlight the actual incidences of fraud within your organization. So instead of tracking down an employee who haphazardly charged twice for cab fare, you can focus on the real issues.
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How do you eliminate the errors?
The initial and simplest answer lies with using the corporate card. When travelers charge expenses directly to the company, they’re not accidentally entering incorrect numbers into their expense reports and leading auditors astray. There’s little room for error, and you get far more detailed and accurate figures. So once again, you can focus on fraudulent behavior. Consider mandating a corporate card program and requiring receipts for all cash expenses under $25 and for all card expenses over $75.
Shaping your T&E policy around corporate card usage simplifies matters greatly for you and makes things easier for your travelers, as well. It also makes it possible to prevent and/or flag expenses that fall out of policy, so you can stop bad spending before the money goes out the door.
With these types of policies in place—and a workforce that understands them—you’re saving money, increasing traveler satisfaction, and separating well-intentioned employees who make mistakes from a few who look to outsmart the system.
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Focus on communication.
Once you’ve separated simple mistakes from bad behavior, it’s time to enact a strong communication plan. Leave no question that fraud will not be tolerated. Let employees know that you’re watching, you’re tracking and that audits are a matter of “when,” not “if.” Publish it in the newsletter. Proclaim it on the intranet. Let your people know that all expense reimbursement claims are open to audit and even surprise audits.
- Use a third-party auditor to track expenses.
- Conduct random checks.
- Investigate those investigating your audit system. (They may be looking for weak spots.)
- Audit cash expenses.
- Identify location and types of expenses.
- Take a detective approach.
Adopting a zero-tolerance policy and shining a light on fraudulent behavior are the best things you can do to deter further fraud. And utilizing a third-party auditing lets you be the big brother without having to be the bad guy. ?
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