About 1 percent of 10 million transactions filed during a three-month period earlier this year on corporate expense reports recently analyzed by Oversight Systems proved fraudulent, amounting to $13.7 million in losses, according to a new report by the auditing and expense management software provider.
Oversight Systems in July analyzed the expense reports of 160,000 travelers, mostly from Fortune 500 companies, that were submitted and approved between March 1 and May 31. Oversight did not disclose the total number of expense reports included in its analysis.
Twenty percent of those travelers submitted at least one report with at least one noncompliant transaction. Oversight found about 6.3 percent of all transactions to be "out of compliance," according to the report. Of these noncompliant transactions, 19 percent were classified as "fraudulent" with an average value of $115 per transaction.
The report showed that "suspicious out-of-pocket" expenses represented the highest incidence of noncompliant transactions, at 2.8 percent of all expense report transactions analyzed, representing a total value of $15 million. "Policy misuse" was second, representing $14.9 million in transactional value, followed by duplicate transactions at $3.8 million.
Additionally, Oversight found that 5 percent of employees committed 82 percent of fraud. This means "within each organization there are only a handful of 'bad actors,'" Oversight claimed.
Oversight clients who monitored expenses on a monthly basis and communicated their travel policy helped promote "appropriate behavior among employees" and witnessed noncompliant activities decrease as much as 70 percent, according to Oversight.
About 68 percent of the travelers whose reports were analyzed used Concur Expense to create and submit their reports. About 10 percent each used Oracle and SAP, and 6 percent used IBM Global Expense Reporting Solutions.