How to Spot Expense Fraud

The Bizarre and Bogus Expense Claims Our Auditing Team Have Stopped 

Every expense approver has raised an eyebrow at expense claims that don’t seem quite right. From fictitious trips and inflated costs to duplicated receipts and claims made for former employees, we have heard all the best stories. While some claims may be laugh out loud funny, the business outcomes might not be.

Can you distinguish a fraudulent expense claim from a genuine mistake? Some whoppers are easy to spot, some not so obvious, but for the person responsible for the future financial health of a business, catching rogue expenses is more important than ever.

Before we look at how to prevent money slipping through the cracks, with the help of an intelligent spend management platform, let’s look at some of the more unusual expense claims we’ve encountered.

Mixing business with pleasure 

The lines between personal and business expenses have always been easily blurred but sometimes the line is clear – and shamelessly crossed!

Exaggerating the business aspect of a “trip” is a common way to expense what is, in all honesty, a holiday. Kudos to employees who try to expense pet grooming because their animal gives them emotional support during work hours. And the ones who try to claim back expenses for designer handbags and expensive watches deemed necessary to promote a professional image.

One employee submitted receipts for multiple personal Amazon orders including make-up, clothing, perfume and toiletries but doctored them to make it look like the orders were office supplies and stationery. Another submitted a suspicious claim for a €1,150 annual contribution to a private and social dining club.

To help you be more on your guard, let’s run through some of the other ways employees may try to get spurious claims over the line and reimbursed.

It's a whitewash 

Pass the Tippex! Editing a receipt for meals, transportation, office equipment or accommodation by sticking white tape over a date, amount or product is quite commonplace – employees sometimes handwrite or type a new date, cost or product type over the white tape.

Some of the things you need to keep your eagle eyes out for:

• Handwriting, in pen, a new amount over the correct, printed one.
• Writing a new month – or name ­– over the existing one.
• Fabricating the item name by typing over the correct one – but using a different font size!

Double take 

This is one that comes round again and again for expense approvers – why expense for a business trip once when you can submit twice? One fraudster tried to submit the same receipt in two different expense reports, with identical details such as date, table number, service number, operator and guest names – but a different time.

So, here’s what else you need to look for:

• Submitting a duplicate expense claim with the same receipt – perhaps one as an e-receipt, one as paper.
• Uploading the same receipt twice in different line items in one report.
• Changing one small detail on an expense claim, such as time or table number, to make it appear like a different claim.

Back to school: 2 + 2 = 5

A sure-fire way to know if the expense might be bogus is if the numbers don’t add up. There might be inconsistencies between the submitted receipts and the actual costs associated with the item, trip or meal. An employee might have overinflated expenses to cover personal expenses or made an error in trying to doctor the receipt.

Things to watch out for include:

• The combined amount of the expense claim amount doesn’t match the individual item price multiplied by the quantity.
• The same receipt has been used for multiple expense claims – e.g. multiple parking tickets, but only one receipt.
• Item costs that seem over-expensive for what they are. Does a taxi from Nottingham to Derby really cost £300?

Hiding in plain sight 

Nobody appreciates being caught off guard by a "hidden extra". Whether it’s a hefty service charge, astronomical upgrade fee or a surprise penalty for late payment, they can be hard to avoid. So, what happens when an employee tries to sneak a little extra something through their expense claim?

Here are some examples of employees not being quite upfront about their expense claims:

• Creating a new expense report but using an old receipt to allow an out-of-policy hotel.
• Adding on an enormous tip – for example, an expense claim for an item costing £2.72 submitted with a £130.000 tip.
• Resubmitting a report with the same receipt but two very slightly different amounts – for example, one that was for £58.60 and one that was £59.60.

 

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Fake it until you make it  

We’ve already talked about doctoring receipts, but some employees go further and create counterfeit receipts from scratch. Creating fraudulent air tickets is of course unethical, but one (now ex) employee did just that to claim hundreds of thousands of pounds from their employer.

Things to watch out for here include:

• Fake receipts that mimic the format of legitimate receipts but contain false information regarding the date, location and amount spent.
• Falsified mileage logs to claim reimbursement for distances not actually travelled or for personal trips disguised as business travel.
• Altered invoices from suppliers or service providers to inflate the costs of goods or services purchased for business purposes.

Picture this - not that! 

They say a picture paints a thousand words but what if none of them are relevant to your expense claim?

To prove their locations, one user uploaded a photo of their assembled, smiling colleagues in situ, whilst another decided to send a photograph of their office table and chairs rather than a picture of their receipts.

But pity most the poor user who took a screenshot of their expense claim and submitted it, not noticing that included in the screenshot was a message to a friend about how much she needed the loo!

SAP Concur: Your eagle-eyed management solution 

Ridiculous or fraudulent, the examples in this blog underscore the importance of a thorough expense reporting process to prevent rogue claims.

The solution is an intelligent spend management solution that integrates travel, expenses, and invoice together.

SAP Concur utilises the power of artificial intelligence (AI), best practices and continuous innovation, with a range of additional products that all provide a watertight barrier between your business and misleading, inaccurate, or downright bizarre expense claims.

According to the Analysys Mason 2022, Travel, Expense, and Supplier Invoice Management Study, businesses worldwide using an SAP Concur solution experienced a 32% reduction in the time taken to approve expenses after automating.

How does this work? 

Start by easily inputting all your receipt data into Concur Expense with ExpenseIT, a feature of SAP Concur mobile. This receipt scanning app will automatically turn photos of receipts into expense line items which are then added to a new or existing claim reducing manual entry time. Email receipts can be forwarded and added too via the same technology ensuring policy compliance and accuracy.

To help avoid those pesky receipt discrepancies, the audit service within SAP Concur identifies discrepancies, ensuring compliance and flagging unusual transactions for further investigation. The SAP Concur mobile app, combined with GPS tracking features, can help verify the location and authenticity of expenses.

To spot patterns and repeat offenders, Concur Detect solution by Oversight utilises AI and machine learning to analyse patterns and detect irregularities in expense reports.  And of course, SAP Concur provides real-time reporting capabilities, allowing organisations to monitor expenses as they occur, helping to identify trends, outliers and unusual patterns in expense data.

Every step you can take now to pin down errant spend, or worse fraudulent claims, will count towards a stronger future.

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