While the ongoing Covid-19 pandemic has scuttled much corporate travel and entertainment spending, the risk of expense violations and fraud has increased drastically, according to new data from Oversight.
The expense monitoring and auditing specialist's July Spend Insights Report found U.S. T&E spending during the second quarter decreased 63.5 percent year over year due mainly to the pandemic's shutdown of corporate travel. However, amid the spending slowdown, risk has surged, with the study reporting a 206.7 percent year-over-year increase in spend violations.
Much of that increase can be attributed to the widespread need to set up home offices in the wake of the pandemic-induced shuttering of traditional office spaces, which presented an increased opportunity for fraud, Oversight said. Fraudulent purchases at electronic and computer stores accounted a "high percentage" of fraud detected during the second quarter, with some employees attempting to expense the purchase of televisions, sound systems and pay TV services under the guise of necessary home office outlays, the report noted.
Meanwhile, the transition to remote work also drove an increase in "first-time spenders"—employees who never had previously submitted expenses, didn't have a company card, and/or were unfamiliar with corporate spending policies. First-time spenders rose 12 percent in April 2020 compared with April 2019, while the rate of out-of-pocket expense submissions surged by 80 percent between January and April 2020. The increase in first-time spenders "likely contributed" to expense outlier and expense threshold violations, Oversight said.
The report, compiled from Oversight's proprietary data, also revealed an uptick in "excessive meal charges," stemming from policy changes around dining. For instance, some organizations previously allowed for meals to be expensed when working late but have ended such meal allowances amid the pandemic. Overall, more than 60 percent of all expense outlier violations were tied to meal spending, the report found.