Expense Reports Are Evolving, But Are Organizations?

While technologies like artificial intelligence can make it easier to pinpoint instances of expense-report fraud, many organizations haven’t embraced digital reporting.

How closely is your association monitoring expense reports? If the answer is “not very,” it could be costing you.

The Association of Certified Fraud Examiners recently reported that companies experience more than $7 billion in fraud annually, and poorly tracked expense reports are likely contributing to that.

Fortunately, automation could come to the rescue. A recent Reuters report cites the example of an industrial equipment company that started using software from the AI-driven auditing firm Oversight Systems and then quickly uncovered two massive cases of fraud involving a single employee. The worker had spent more than $12,000 on doggie day spas and had sold more than $200,000 in company-owned equipment online.

Oversight Systems’ Terrence McCrossan told Reuters that the fraud was uncovered because the software signified the need for a deeper investigation. “It started out as a small infraction that led to an investigation that led to other things,” he said.

You likely don’t have an over-the-top eBay business happening under your organization’s nose, but what you might have is a whole lot of manual expense reporting that is hard to track, especially when it comes to travel-related expenses. Business travel spending is expected to reach $1.6 trillion annually by next year, according to

While there are lots of digital options to manage expenses, many organizations aren’t using them.  A Level Research survey found that nearly 60 percent of respondents didn’t have a digital expense-tracking mechanism, despite evidence that such systems spot reporting problems more easily than traditional tools.

One possible reason? A perception that any expense theft that does happen is small, said Eric Tyree, Carlson Wagonlit Travel’s chief data scientist, in comments to Skift.

“I reckon, based on previous experience in the financial industry, that there is probably a bit more fraud out there than people realize,” Tyree said. “If a system can be exploited, there is a small percentage of the population that will attempt to exploit it.”

But not every expense-reporting error is a case of fraud. Speaking to Reuters, AppZen CEO Anant Kale noted that his firm’s system—which can pay out reimbursements within two days—often catches basic reporting mistakes.

“Employees are claiming the same expense multiple times. That happens more often than you can imagine,” Kale said. “It’s not fraud, but an honest mistake.”

(Ridofranz/iStock/Getty Images Plus)

Ernie Smith

By Ernie Smith

Ernie Smith is a senior editor for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. MORE

Got an article tip for us? Contact us and let us know!