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.
Other common fraud-combatting techniques include requiring
receipts for all travel expenses (66 percent of respondents), mandating
employees use corporate cards for travel expenses (59 percent) and regularly
auditing expense reports (52 percent).
Of those surveyed, 8 percent claimed their companies had
uncovered significant fraud in travel expense reporting, most commonly
falsified and altered receipts that inflate eligible travel reimbursements,
according to AirPlus.
While Coach Inc. director of global travel Kim Kaye told Travel Procurement that she hasn't seen
much fraud activity at her company, she noted that peers have indicated that
using corporate cards at retail establishments is one common violation. At
Coach, Kaye reviews all requests for corporate cards before they are issued.
Once issued, the company monitors card use, receives reports from its preferred
card companies that identify questionable charges and conducts audits within
its expense system.
"Card companies like AirPlus and American Express put
parameters into reporting based on merchant IDs that identify them under a
specific category, and that's how you get the kind of reporting where you're
able to look further into it," Kaye said.
A 2012 Association of Certified Fraud Examiners report found
that 14.5 percent of fraud in the workplace is tied to expense reporting. ACFE
director of research Andi McNeal said expense reimbursement fraud is a "pretty
common problem" for employers.
"From my experience, the biggest concern for most
employers is employees trying to claim personal expenses as a business expense
on reports," McNeal said.
This includes employees who claim reimbursement for expenses
accrued while on personal vacation or time off. Other types of fraud include
overstating travel expenses or submitting the same expense multiple times.
To manage fraud, McNeal said one best practice entails using
analytics and technology to monitor trends and look for anomalies in expense
reports, such as duplicate charges, expense dates that match up with employee
vacation days, or reports submitted without original receipts.
While expense system providers have developed more
technologies to better detect it, reimbursement fraud has remained relatively
stable since 2008, according to ACFE data. Expense reimbursement fraud since
2008 has accounted for 13 percent to 15 percent of all corporate fraud.
"The level is remaining relatively constant,"
McNeal said. "We do see people trying to become more savvy and creative
with the way they're perpetrating [fraud] with all sorts of electronic
uploading of payments, but at the same time anti-fraud professionals are
getting a little more savvy as well and putting better tools in their tool box."
The most effective method organizations can use to prevent
fraud is letting employees know that auditors and front-line managers will
scrutinize reports, McNeal added. "Then they're less likely to try to pull
something on the company."
Sempra Energy travel services and charge card administrator
Jessica Davis said handwritten receipts for taxi rides paid in cash are the fraudulent
expense employees most frequently submit. Passengers can add as much money as
they want to the receipt, and the company has few options to verify the amount
claimed, she noted.
Davis suggested mobile technology can help with this and
other challenges, including loss of paper receipts and delays in the approval
process. As one example, she noted the Taxi Magic application, which allows
employees to book taxis and pay with a corporate card, including tip, and
receive an electronic receipt, all through the app.
"The more we can push reservations and payments online
or through mobile technology, the better off companies can be in regards to
accurate expense reimbursements and ultimately save money," Davis said.
This report
originally appeared in the August 2013 edition of Travel Procurement.