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Identifying Fraud within Travel Expense (T&E)

Introduction

Achieving compliance with company travel policy can help control overall travel spend and increase employee confidence by creating a culture where employees are confident that all employees follow the same rule book to comply with policy requirements.  Whether or not deviations are intentional or simply mistakes or carelessness, processes that appropriately detect and correct can guide the majority of “inadvertent abusers” to become compliant and also provide the necessary objective evidence to support disciplinary action, as appropriate, in cases where intentional violations are substantiated.  

Traditionally, policy enforcement relied on a manager’s review of an employee’s expense report, with most managers not having expertise in travel policy, nor the patience or interest in performing a detailed review, or willingness to challenge small errors because of concern with causing friction with an otherwise highly-valued employee.  Reviews performed during the processing of the expense report might include staff with greater knowledge of what constitutes a policy exception, but the volume of reports created bottlenecks and high costs to ensure high levels of compliance. 

Fortunately, with the addition of sophisticated data analysis software, relationships in the data can be analyzed quickly, with possible violations flagged for follow up.  These capabilities dramatically improve the ability of companies to efficiently and effectively create a control environment that improves traveler compliance with travel policy, including better controls to prevent intentional fraud.

iPollingTM Results Review

Peeriosity’s iPollingTM was recently used by the Manager of Supplier Services at a large global company with revenues of over $80B, with the goal of better understanding how other large companies identify fraud or other significant deviations from travel policy.   The first of two poll questions asked about the organization’s primary solution or approach to identify fraud in Travel and Expense (T&E).  For 32% of member companies, the top response was use of Oversight Systems Software.  For 23%, the response was to rely on Standard Internal Auditors, and an additional 18% cited another software solution, Concur Audits – Prepayments, as their top response.  The balance of responses included the use of in-house T&E compliance, and in-house forensic auditors, with no one indicating that they primarily rely on Third Party Audit Firms.  Here are the details:

The second polling question asked about the overall level of satisfaction with the current fraud detection solution or approach.  66% of responding companies were either satisfied or very satisfied, with 24% indicating they were indifferent.  Only 10% reported they were dissatisfied.

Here are a few of the poll comments from Peeriosity members:

  • We primarily rely on the manual review by the employee’s supervisor.  We are unsatisfied with this approach.
  • We leverage an in-house T&E Compliance team and have built our own audit rules to audit only high-risk spend categories / situations, plus statistical sampling.
  • We have policies and controls in place to help us monitor for fraud.
  • We do some risk-based audits before processing reports for payment. We also sample actual receipts afterwards. In addition, we perform analytics and trending using reports from our credit card provider’s site.
  • We mostly rely on pre-audits in Concur, but we also use Oversight to detect duplicate payments after the fact.

Closing Summary

Achieving a proper level of compliance with company travel policy can help control costs, with the added benefit of eliminating uncertainty for travelers, once they understand that what the rules are, with a high confidence that policies will be understood and consistently enforced.  Because high value employees, often connected to revenue generating activities, are the ones who are most likely to travel, a focus on educating and correcting is often appropriate to address all but the most extreme policy deviations.  A number of methods are available to accomplish these objectives, including new sophisticated software tools that can quickly review thousands of transactions to flag transactions where a closer look is warranted. 

How does your company review travel expense transactions to ensure compliance with travel policy and assist with detecting possible fraud?  In addition to traditional methods, are you using software solutions to help you identify suspicious transactions?

Who are your peers and how are you collaborating with them?

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Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.



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