Precisely what is Company Fraud and How Do you really Stop It? (Part 2 of 2)

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In the initial article of this series, My partner and I defined fraud and discussed the way it can occur in a company, in addition to providing some real-life degrees of when and how it has happened in the corporate world. In the instructions for the second – article, we have down to nuts and nuts; how do you minimize fraud with your company?

There are two key steps required to stop scams in your company: Step 1: identify your fraud hazards; Step 2 – implement corporate and business expense management software regulates to minimize those risks.

 STEP 1- Identify Your Dupery Risks

Is your company liable for any of the following?

Variances concerning hardcopies and computerized accounts;
Departure and return flight tickets on different dates however with no corresponding hotel charges;
Meals on weekends as well as in nonwork locations;
Very poor descriptions and incomplete certification such as a missing boarding cross, itinerary or receipt;
Date ranges out of sequence;
Old bills;
Nasty or inconsistent answers to questions regarding says. A common response is “how dare you to question my family? “;
Altered bills;
Credit card statements or results instead of receipts;

*Airline tickets:

Staff members have been known to pay for airfare using frequent flyer things and then claim the cost of some sort of ticket as an expense in the company. This can be considered some sort of fraudulent activity;

There are numerous elements employed to defraud a financial institution through the use of airline tickets. Organizations should be diligent when dealing with airfare exchanges, refunds, partial repayments and the possibility the airline flight being claimed was not consumed (evidence of car rental, airport parking at the home airport, dinners or other expenses from the destination are not present).

*Duplications to watch out for:

These may not be equivalent amounts as in the case involving partial hotel bills;
Tardy charges on mobile phone charges;
The same expense may be described twice in one period or maybe in two or more periods which has a different description and code.

*Claiming personal items may also be a source of fraud from the company. These can include:

Journey for family members;
Retail or even personal purchases;
Excursions additional to business trips;
Additional days in a hotel, car rental etc .;
Gift shop, deep massages, etc . may be included on the hotel bill;
Non-authorized excursions.

Organizations should also be thorough in identifying expenses becoming claimed that were not suffered. This is especially relevant when linked to the claiming of meals expenses and meal each Diem expenses;

Inconsistencies for instance taxi and rental auto claims for the same portion of getaway or mileage calculations that might be clearly inflated;

Overstatements might or might not be deliberate, however, they include typographical errors ($34. 95 documented as $3, 495) as well as incorrect exchange rate conversion rates.

There are numerous other less apparent activities that fail to conform to legislative and/or company plans. Examples of these failures consist of improper codings, such as resort bills that include meals, cell phone, etc ., that are reported because of lodging; car rental which may not really fall into a company authorized course; and the use of prohibited providers.

STEP 2 – Implement Company Expense Management Software Settings

In order to minimize the risk of fraud in the company, your corporate charge management software controls need to be designed to provide and assist the 5 W’s (Who, What, Where, When, along with Why). They must ensure that the most reasonable, authorized expenses suffered in order for a staff member to carry out their job responsibilities are generally paid with the corporate MasterCard and documented with an initial, valid, unaltered receipt, plus they must be implemented throughout the whole organization, at all levels and all functions.

In practice, these types of corporate expense management software program processes, controls, and methods are very broad. They connect with items such as approvals, authorizations, verifications, reconciliations, segregation associated with duties, reviews of working performance, background investigations, as well as physical security. They need to become embedded in your day-to-day administration and monitoring processes, plus they need to also leverage accessible information technology.

Segregation of Obligations as a Corporate Expense Operations Control

Given the nature of the webpage payable and the related characteristics, segregation of duties can be a crucial consideration. The following can be a partial list of duties linked to accounts payable and how they must be segregated.

*The person responsible for traditional bank reconciliation should not:

Handle unclaimed property reporting
Be a personal unsecured on a bank account

*The person who is usually checking signature should not:

Permit invoices for payment when using an account that he/she is a signature
Have ready usage of the check stock.

*An individual who is responsible for the check inventory should not:

Be an authorized unsecured personal
Handle the bank reconciliations

*Anyone responsible for the master seller file should not:

Be a certified signature
Be able to approve bills for payment
Handle unclaimed property
Individuals responsible for addresses payable functions should not also generally be responsible for accounts receivable.

Additional Corporate Expense Management Regulates

*Some other corporate expense supervision controls that are helpful in fighting fraud include:

Requiring enterprise purchases be made on a corporate and business credit cards
Monitoring transactions around the corporate credit cards
Direct payout of corporate credit cards
Pre-population of corporate credit card info in expense report planning
A good system of approvals to stop unauthorized reimbursements
A thorough report on an individual’s expenses over a time frame

Implementation of PostProcurement surroundings (historically we have been working in any pre-procurement environment (Purchase Requisition, Order, Receipt, Remittance, three or more Way Matching, Journal, and so forth ) which can lead to at the least 20% of transactions staying disputed. )

Corporate Price Management Software

Corporate price management software automates often the management of expenses says, significantly reducing the risk of blunder or fraud and totally managing all purchasing records. A good corporate expense managing software solution can reduce control costs by as much, so the payback period is definitely tangible and measurable (often less than 6 months).

Finding a corporate expense management program solution, ensure that it can take care of digital data from a collection of B2B transactions including obtaining cards, travel expense memory cards, fleet cards, mobile phones, and also Internet purchasing.

The information then can be integrated into operating systems including recruiting, accounts payable, general journal, and ERP. Furthermore, be sure that it accommodates all major bank card transactions, that it is nonbank certain, and that it can operate with all the world’s leading ERP devices.

And finally, before choosing your corporate and business expense management software option, consider the fact that technology is just not the entire story in accomplishing corporate expense management results.

Cultural issues, resistance to alter and corporate ownership are the finest barriers to the growth of credit card programs and the realization of advantages. You must be confident your corporate expense management application solution provider has a customer-focused consultancy-based approach to consumer relationships of which technology is barely one very important part.


Fraud is a significant fee to many (if not most) companies. But it doesn’t have for being. By identifying your dupery risks and implementing ideal corporate expense management and corporate expense management program, you can very effectively limit your fraud risks. With the right corporate expense managing software solution, ROI inside of 6 months is very achievable.

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