The Washington Post recently ran an editorial on the difficulties federal workers are facing nearly three years after the spending scandal over a lavish Las Vegas conference. The 2012 scandal started after a report surfaced regarding details of an $800,000 training conference for government employees. In response to widespread backlash over frivolous government spending, government agencies are now not allowed to serve food and beverage at conferences, and strict pre-approvals make it hard for government employees to travel for continuing education and certification classes.
Article author, Lisa Rein writes “White House officials say the restrictions have saved close to $3 billion and ensured that taxpayers are not paying for more boondoggles. But these officials are also acknowledging that agencies have become too rigid.”
As my colleague, Chris Rossie, likes to say, “This is a classic case of not inspecting what you expect.”
And he’s right. Back in 2012, although the GSA expected employees to be good stewards of taxpayer dollars, but they didn’t inspect such spending with proper preventive and detective controls to catch suspicious spending both before and after it occurred. I’m speculating at this point if the GSA had proper financial controls at the time of the conference in question, but even if they did, it is safe to say they absolutely failed.
Many of the lavish expenses at the conference in question including money spent on clowns, tarot card readers, and a $30,000 reception, which aren’t difficult to spot as “out of the ordinary.” It’s just that no one was even looking in the first place.
Wasteful and abusive spending happens at even the best-run organizations. The key is the actions that organizations take to identify that small percentage of abusers and do something about it. Unfortunately, some organizations don’t have a proper expense audit tool and/or process in place to begin with. Then something bad or embarrassing happens, or they realize that too much money is “leaking”, and to better control spending they restrict too many MCC codes and create cumbersome policies that keep cardholders from maximizing card use for rebates or for the good of the company.
This response makes sense, of course, but many forget that technology already exists to solve this exact problem: how to balance good financial stewardship while making it both easy on travelers, and easy to spot the fraudsters.
Many government agencies leverage automated transaction analysis, such as Oversight’s Insights On Demand platform, to provide flexibility to employees while keeping a close eye on government spending. SaaS technology makes it easier than ever to monitor 100% of expense transactions for suspicious and non-compliant spending. Oversight has helped many government organizations, as large as the US Department of Defense and as small as universities, prevent millions of dollars in improper payments, and most of our clients see a 70% reduction in non-compliant spending within the first six months. When employees know they are being monitored, they are more likely to act as expected. You’ll save money and have peace of mind.
By combining technology and implementing better spending policies government organizations can have a fool-proof financial control that allows employees to travel easily while keeping an eye on taxpayer dollars.