A survey of corporate travel buyers on combating fraud found, as reported in Business Travel News, that “the most common way corporate travel buyers safeguard against fraud is to require manager approval of all expense reports, according to a new AirPlus survey. Eighty-one percent of the 119 North American corporate travel buyer respondents to the survey do so.”
In terms of giving corporate travel managers advice on how to further their safeguarding efforts against fraud, I encourage them to read our 6-part series on the blog starting with “Tip #1” for cutting fraud and waste in T&E departments. The challenge that companies have with fraud and waste in T&E is their continued reliance on management approval and sample-based audits for safeguarding against fraud. We have identified frequent instances of employee fraud and abuse that routinely beat management approval, audits, receipt requirements, and corporate card requirements. Travelers who want to beat the policies have an arsenal of weapons at their disposal including:
- Duplicate submissions across multiple expense reports with one as a corporate card expense and one as an out-of-pocket expense
- Duplicate submissions across travelers with one as a corporate card expense and one as an out-of-pocket expense
- Misclassifications of expenses by purposefully using a valid expense type to report an invalid expense
- Claiming out-of-pocket expenses because credit cards are not accepted
Relying on approving managers as a control against fraud and waste is an incomplete strategy for preventing fraud. Approving managers don’t have the time or the information necessary to identify most fraud and waste during a manual review. Our experience is that 2%-5% of expense reports contain at least one claim that is potential fraud or waste. An additional 4%-9% of expense reports contain at least one claim that violates company policy. All of our customers use corporate cards, all require management approval prior to payment, and all have audited reports prior to using Oversight Insights On Demand (which is currently available as a free trial on our website).