How common is expense report fraud? According to the Association of Certified Fraud Examiners’ “2016 Report to the Nations on Occupational Fraud and Abuse,” 85 percent of all business fraud schemes involve some form of asset misappropriation, with expense fraud making up about 14 percent of such schemes.
Obviously, this is a costly problem. Before the prevalence of expense management automation, there were few good solutions — only tradeoffs.
Now, advanced expense management systems can identify and flag questionable reports, so businesses can focus their accounting and auditing resources on higher-risk reports instead of having to choose from the old menu of unpalatable options. As these systems grow in functionality and companies become more sophisticated in their use of them, businesses can stop most expense reporting fraud without incurring huge costs.
Leveling Up
The next level of sophistication is being able to stop an end user before he or she even submits a report that would be flagged according to those criteria. Then, instead of accounts payable having to audit flagged reports and send back those that are non-compliant, the onus is on the submitter to get it right in the first place.
The Ultimate
When all the information about expense reporting policies, accounting review triggers, user behavior and other fraud indicators are collected and fed into a smart algorithm, it can do things such as come up with a fraud risk score that’s based on many data points, beyond just what the system has been told to flag. This enables businesses to use intelligence and best practices and benchmarks from across a larger customer base and applying them to reports, so they can apply that additional layer of security without needing an expert in fraud detection.
Fortunately, with automated expense systems, none of this has to be mutually exclusive.
Instead of throwing in the towel or devoting a ton of accounting resources to reviewing reports, business owners can use a smarter, more modern approach to detecting and auditing high-risk reports so they can spend their time on more strategic things.
Ethan Laub is director of product management with Coupa Expenses . He joined Coupa in 2015 when Coupa acquired TripScanner, an open booking technology company that he founded. Prior to that, he was a director of account management for American Express Global Business Travel.
Maggie Mae Joy is a product manager for Coupa Expenses. Prior to that, she was a senior implementation manager, leading more than 30 successful Coupa implementations.
