Emerging technologies can play a critical role in stopping fraudsters in their tracks. According to a 2014 guide, most fraud occurs because reviews and approvals become more lax over time while workers find loopholes as they spend more time with a particular system.
Here are 5 ways T&E fraud has been committed in the past and one solution for avoiding the same problems by using a per diem system.
1. Falsified Expense Reports
A major source of fraud comes from inaccurate reports submitted by workers alongside their receipts. Thousands of dollars of non-travel related expenses have been approved because administrators don’t have the time to do the research behind the expense. Perhaps this is because they're doing expense reporting manually and they're already spending hours just on data entry, not to mention research.
2. Changes in Controls
A change in system controls might be a clue into fraud. If someone’s approval authorization has recently and inexplicably been altered, particularly for a short period of time, that might be a hint into a source of fraud. If an approved person’s limits were increased from $500 to $5,000 for just a few minutes or hours, that could indicate a problem.
Keeping a close eye on who is authorized to do what and any changes in those controls might sound like a lot of work, but it could be worth it to discover fraud.
3. Personal Travel Billed Officially
Just two months ago, a non-military government worker responsible for inspecting Marine Corps facilities was sentenced to a year in prison and restitution for the $197,505.83 he had fraudulently charged to the government. He had not only charged personal travel but also created false paperwork to cover that travel.
4. Double Reimbursement
In previous cases, it’s been shown that double reimbursement is a big source of fraud. This might seem like an obvious catch, but because administrators are short on time and their desks are stacked with documentation, it’s easy to pass inspection.
This happens when a worker submits two kinds of proof for the same expense. Let’s say that a worker submits a receipt for an Uber ride the week after they come back. Then, a month later, they submit the same ride again using the email confirmation. In the end, the fraudster gets one ride and twice the reimbursement.
5. Altered Receipts
This happens when a receipt is changed from its original amount and the perpetrator keeps the difference. This can happen when a lunch goes from $10.10 to $40.40. Or, it can grow even more if the cost goes from $80 to $180. This one is hard to catch and requires careful consideration of the receipt. If the amount doesn’t seem right, follow your instincts. It might not be right.
6. Honest mistakes (BONUS)
Let’s say a worker takes a cash-only cab and leaves a $10 tip. Days or even weeks later, this employee could report that they left a $20 tip. This could be a simple honest mistake of misreporting. Having expense reporting software in a mobile app encourages quick updates because it’s so easy to enter on the go.
Maybe you’re not concerned that the same situations described above can happen to you. Instead, maybe you’re concerned about accidental T&E fraud. In this situation, DATABASICS helps federal contractors ensure that their expense reporting of travel and entertainment expenses is fully compliant with the Federal Acquisition Regulations (FAR), Federal Travel Regulations, and the Defense Contract Audit Agency (DCAA).
DATABASICS is relied upon by leading organizations representing all the major sectors of the global economy: financial services, healthcare, manufacturing, research, retail, engineering, non-profits/NGOs, technology, federal contractors, and other sectors.