Fraud prevention refers to implementing any strategy that helps to detect fraudulent banking activities or transactions and prevent them using the necessary steps. It helps to prevent damage caused to reputational and financial damage to the financial institution and customer. Due to the increase in the popularity of mobile and online banking channels and the digitization of financial institutions, implementing a strong fraud prevention strategy is essential.
Cybercrime and fraud prevention are connected in many ways and are constantly changing. Since many fraud prevention professionals are developing new fraud detection and authentication solutions, fraudsters seem to be networking, monetizing, and exchanging information with each other on the dark web.
Technological advancements have led fraudsters to use more sophisticated techniques and malware to conduct fraudulent activities successfully. Nevertheless, fraud prevention technologies have made great progress and continue to do so. So, it is important to know the best fraud prevention tactics to safeguard your organization in the best way possible.
How To Identify Expense Fraud?
Undoubtedly, it can often be a challenging task to identify expense fraud, and none can optimize and quantify human ethics. However, there are a few ways your finance team can identify and prevent expense fraud in the organization.
Flag Unusual Expense Claims
When reviewing and approving the reimbursements, check on the employees claiming a higher amount than their colleagues for the same activities. While they could have chosen an expensive option within the policy’s specified amount, it could also indicate a possible overstated expense fraud.
Keep a Check on Meal Claims and Client Gift
In some cases, employees can give expensive gifts to potential clientele. But, if they happen too regularly, it can be a sign that your staff is trying more than usual to win over new clients or stealing some of the customers’ extravagances. In any case, paying special attention to client-related reimbursement procedures is prudent.
Regularly Question Employees About Expenses
When you notice minor inconsistencies, it is essential to have an honest discussion with the employees. It will aid in understanding whether or not the misreporting was an innocent human error or malicious.
Any inconsistent, duplicate, or irregular expenditure reports can be found easily with an expense management solution. The automation solution automatically validates expense reports and flags the expense receipts that require human attention. So it would be easier for you to track and eliminate duplicate and inaccurate invoices.
How to Prevent Expense Reimbursement Fraud?
Usually, it’s a lot easier and cheaper to prevent expense fraud before it takes place. Effective preventive measures can save you time and money in the long run, besides safeguarding your company from fraudsters.
Below are the Most Effective Techniques to Prevent Expense Fraud
Have an Internal Expense Policy
No matter a person’s department or rank, the rules should apply to everybody, and having a clear, written policy ensures everyone is aware of them. Send the policy to all staff members, and ask them to read, understand, and confirm their understanding. Provide details about the company’s response to policy violations and bogus cost reimbursement claims in your policy. Describe the effects of fraud on the employee in detail.
Implement Controls at the Submission Stage
The company’s policy controls should be applicable to every employee of the organization who submits the claim, regardless of their role and department. Controls must also be applied to executives and top management since they may commit expense fraud. Ensure the people putting the controls in place know what to check and why. Provide clear information and instructions to the employees who are authorized to review and approve expense claims. To prevent mistakes and lower your chances of a multi-employee scam, mandate a two-stage clearance procedure for all expense claims.
Empower Approvers to Question Employees
The expense policy should demonstrate to staff members that submissions are genuinely examined and verified by encouraging inquiries into expense claims. Any costs that don’t adhere to the company’s spending policy should be rejected.
Conduct Regular Audits of Reimbursements
Both scheduled and unanticipated audits guarantee that all employees adhere to business policies. Employees should be informed that their spending is monitored for inconsistencies and small breaches.
The Bottom Line
The last thing any employer wants to do is deal with expense fraud. No matter the size of your organization, expense frauds are unavoidable. However, these tips can aid in preventing fraud in your expense management system effectively.