November 12-14, 2017

Bellagio Resort & Casino, Las Vegas

What You Don’t Know CAN Hurt You: Uncovering T&E Fraud

Suzanne Fassler, CMA, CAPP

About Suzanne Fassler, CMA, CAPP

A. Experienced with T&E in nearly every configuration there is: 1. paper, 2. Excel, 3. Concur, 4. Oracle, 5. Company-pay, 6. Employee-pay, 7. Flexible, 8. Strict, 9. Multi card, Single card…

B. Assigned Warehouse Controllership to create control environment

C. Centralized T&E Management D. Converted to Oracle iExpense

Presentation Objectives

• Provide data points to support your purpose – demonstrate that sleuthing out potential T&E fraud is worth it

• Provide ideas for organizing/targeting your audit efforts

• What to do if you suspect fraud

T&E Fraud – A Canary in the Coal Mine

When T&E Fraud is discovered, even if they’re minor violations, 75 percent of the time those same individuals are committing other fraud or misusing company assets as well!

According to the ACFE (Association of Certified Fraud Examiners)

Costco Analogy

On a trip to Costco they invite you to upgrade your account. They review your account with you.

This Photo by Unknown Author is licensed under CC BY-NC-ND

T&E: A Big Deal and Managable

T&E represent 8-12% of company’s operating expenses ($8k to $12k for every $100k of expense)

In Organizations with up to 500 employees, the average expense filer spends $10,150 per year.

(For 100 employees, that’s > $1M in spend.)

The typical organization loses 5% of annual revenues to fraud. $50k per $1M in revenue

Source: Fighting Fraud: The Simple Guide to Preventing ‘Padded’ Expense Reports.” Concur.

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The median instance of T&E fraud costs $26k1

6% of T&E transactions are out of compliance —about $60,000 for every $1 million a company spends on T&E2

It takes an average of 18 months to detect T&E Fraud and 24 months for reimbursement3

Why???

Rationalization – Didn’t get a raise

– It’s a small amount

– Not doing it frequently

– Small compensation for time away from home

Relative Morality…“Do Not Steal” has become “Do Not Steal Too Much” or

“It’s OK As Long As No One Notices” or

“It’s Not As Bad as Embezzling” or “Cooking the Books”

A Sense of Entitlement

Methods For Sleuthing Out Fraud

• Regardless of

– Receipt rules

– Whether alcohol is permitted

– Who pays the bill

– Sophistication (or lack of) process

– Policies

But, Let’s Talk Policy for a Minute

Policy - Foundational, Sets and Reflects the Spend Attitude of the company • You have a policy to:

– Set Expectations – Manage, Accurately Classify Expenses – Define Compliance – Define Consequences for Non-Compliance

• A Prescriptive policy is not necessarily better than a Principles Based policy to prevent or deter Fraud

NO, Loose, or Unsupported Policy will guarantee excess spending. A Policy

should ABSOLUTELY spell out the consequences for non-compliance

November 12-14, 2017

Bellagio Resort & Casino, Las Vegas

Whatever Your System or Policies… Where to Look

Policy + Review/Enforcement = Compliance

• Know the policy inside and out. Find clear rule items and find discretionary categories.

• Quantify Spend. Even ‘dirty data’ is revealing.

• Based on your company’s spend categories, target the big spend areas.

• Target traditionally vulnerable items.

• Include random audits

How to Look, What to Look For • Create an audit checklist for efficiency and

consistency. • Duplicates • Wholeness of Receipts • Like to like comparisons

– Traveler 1 to 2, Similar jobs, Division comparisons

• Application of credits • Cancelled Trips • Event deposits • Mileage • Parking • Outside average trip cost • Just Under Threshold • Actual vs Budget • Memberships and Subscriptions • Check multiple reports from a traveler • Compare ccard charges to expense reports

Suggestions • Own and defend the Policy and Spend Management

• Dedicate resources to compliance

• Audit prior to payments

• Apply the policy consistently – no one is immune

• Let them know you are looking? A “beware of dog” sign helps even if the dog does not exist

• Send a “you passed” note for good audits (reinforce good behavior, let them know you looked)

• Copy approvers on communications – hold them responsible for their sign off decisions

• Aggressively suspend cards – with notification to users. Say what you are going to do and do it.

• Require authorizing managers to sign missing receipt forms

• If you are not aggressive,

– The boundaries get fuzzy

– The offenders get more casual

– Your team gets complacent

• Support/Reward your team on their findings

• Use your analysis and audit findings to encourage the appetite of leadership for more spending on T&E systems/support. Report T&E spend and audit discoveries to keep awareness up. (Costco Spend Analysis)

If you suspect or know of fraud

• Use Internal Audit and Loss Prevention to expand the look

• Involve HR when it comes to action

• Demand reimbursement

• If no reimbursement, issue a 1099

Don’t Rationalize a Lack Of Integrity in “small” matters – people of questionable integrity are

not entitled to be responsible for spend decisions in your company

November 12-14, 2017

Bellagio Resort & Casino, Las Vegas

Thank You!