5 Ways to Help Spot T&E Expense Fraud

Travel and entertainment is at the top of the list of most company’s expenses, taking second place only to payroll. A J.P. Morgan survey found T&E can account for 10 to 12 percent of a company’s entire budget, making it a prime area to target for potential waste and abuse. 

T&E Fraud Rampant 

Expense fraud runs rampant, particularly in certain industries. The 2014 Association of Certified Fraud Examiners (ACFE) Global Fraud Study found it especially rife in the education, construction, health care, charitable, social services and religious sectors, where T&E fraud accounts for up to 33 percent of the overall fraud in the industries. 

Problems often arise due to corporate policy ambiguities, which you can correct by establishing and enforcing precise guidelines. Travel and expense management software is another way to keep T&E expenses on track and under control. One more strategy that can help you pinpoint potential fraud is through proactive data analysis and monitoring. 

Proactive Data Analysis and Monitoring 

Reviewing and monitoring expense data can significantly reduce the duration and overall cost of fraud schemes, but only 35 percent of companies use it. The ACFE study found data analysis can result in fraud schemes that are 60 percent less costly and 50 percent shorter in duration. 

A solid place to start your data evaluation is by looking for unusual relationships. These may include: 

1. Employees being reimbursed twice for the same item, such as one reimbursement as a cash expense and another for a credit card expense 
2. Expense report details that have questionable keywords, such as liquor, gift, jewelry or .com 
3. Expenses for meals when group meals or included meals were on the agenda 
4. Employees that consistently spend more during travel than the average amount spent by other employees in the same department 
5. Activity or employees that may be a higher risk due to past expense report infractions or multiple issues with expense reports. An example would be keeping a closer eye on an employee who has a habit of submitting unauthorized expenses over one that once submitted an expense report past the deadline. 

A number of tools are available to help you analyze your expense report data, which could result in significant savings from duplicate and inappropriate expenses or even fraud investigations. 

With the ability to pinpoint high-spending employees, you can research their habits further to see if they need some guidance. Not all over-spending may be fraud, but it could be due to choosing the most expensive hotels and restaurants or booking flights at the last minute. 

Proactive data analysis and monitoring can help you control unnecessary costs while yielding important information that helps your company better shape and enforce your corporate travel policies. 

Another way to keep travel expenses on track is with the best expense report software.