When it comes to a company’s expense reports, there are some problems that can occur. While those problems may seem small at the time, if they remain unchecked they’re anything but.
There are two primary problematic things that happen with expense reports. In one case, employee error may happen. Employees may be tired, overworked or simply not paying attention and they may make errors that end up costing their employer. Then, there are the more nefarious situations that involve employee fraud.
While both can be costly and can be a headache to deal with, errors are something that will be dealt with differently than fraud in most organizations.
If you spot something in your expense reporting software or your auditing team sees a red flag, how do you distinguish if it’s fraud or an error?
Common Errors
Sometimes knowing the difference between situations of common errors versus situations that are more often fraud can be helpful.
An example of an error might be taking an expense to the wrong account. Maybe there are two accounts and an expense shows up in an account where it doesn’t fit, probably because the data was entered incorrectly. That’s not even an error on the part of the employee who’s submitting the expense report.
Company Policy
If there is something going on with expense management and you’re not sure if it’s fraud or an error, you should think very clearly about your company’s policy. Your company’s policy on T&E and expense reporting may be in reality to blame for what’s happening.
Organizations often aren’t willing to take accountability for their employees’ mistakes that are the result of their own policies.
If you see red flags, maybe it’s time to go over your T&E policy and see if there could be an honest mistake there, resulting from inconsistencies in how the policy is written or the fact that information is being left out.
In more cases than you might think, it’s not fraud or incompetence, but instead, the problem lies in the policy.
Look for Patterns
Finally, if you can spot patterns, it’s more likely that something that’s happening isn’t an honest mistake and could represent something more detrimental is happening. This can be where having robust expense software can be helpful – it’s much easier to spot patterns when you can go over everything in a centralized place.
If you can see that someone is consistently doing the same thing, it’s probably not an error. Even more than that, what a pattern might show you is that the problem is getting worse over time. It might have started out very small, and as the person has consistently “gotten away” with it, the problem may be getting bigger.
It’s important to have software that allows you to see all of your data at any given time and compare it to other components of expense management in the business. For example, is there an employee who’s consistently spending well above the average? Are there certain trips that can explain why someone’s spending might be more lately?