For the bulk of enterprises, spend audit is like a visit to the doctor today—symptoms get treated with very expensive medications but the underlying disease, the root cause of the patient’s illness, goes unaddressed. This is what happens when you take a transactional approach to spend audit—you treat the individual items of improper spend (the symptoms), but you miss the bigger behavior trend (the root cause) behind them.
Transactional audit vs. Risk-based audit approaches
There’s more to controlling employee spend than matching receipts to expense report data. While this has some value, it’s a largely clerical chore that focuses on expense report errors rather than spend risk.
This transactional approach simply validates the completeness of an expense report and inclusion of related receipts. Automating the process with technology can add efficiency by limiting the need for manager approvals. But, overall, the impact of a transactional approach to spend audit is restricted by its line-item view and analysis—it misses the large component of cross-report, pattern-based risk.
When you’re focused on treating the symptoms and not the cause, you’re not changing any business outcomes.
A more advanced approach is risk-based. Rather than just automating the clerical job of spend audit, a risk-based approach combines the best of policy and risk analysis to deliver high-value business outcomes and operational efficiencies.
For maximum impact, this approach needs to go wider within your organization. Your risk lens in spend audit should span across all spend channels including T&E, P-Card, procurement, accounts payable, and general ledger. Again, it’s about more than the expense report receipts.
When you apply AI to a risk-based spend audit approach you can act on risk in real time. This requires accessible and trustworthy data for cross-process issue identification.
Risk-based audit approach starts with data
A platform for risk-based audit will integrate with all of your finance systems to identify spend risk no matter where it resides in your organization. By analyzing all data dimensions over time, you can more effectively enforce policy and mitigate risk. Your controls evolve beyond simple clerical review to a robust risk analysis that meets the needs of all stakeholders—operations, internal audit and compliance.
You can detect the behaviors not just the individual transactions. This means you can identify repeat offenders, non-compliant trends, and habitual waste and misuse. By correcting the behaviors, you gain efficiency and prevent future fraud, waste, and misuse across your corporate spend.
The spend audit approach you use will significantly impact how you move the needle in optimizing your business.
To start treating the cause, not just the symptoms of spend risk, take a look at Oversight’s AI-powered audit and risk management platform. Oversight goes beyond the receipt to deliver enterprise-wide visibility into spend risk. Companies that use Oversight prevent non-compliant spending, rather than merely detecting it.