In the post-pandemic landscape, an increase in the level of organisational fraud is almost inevitable according to SAP Concur head of solutions consulting Mark Wilfred.
“If you have not uncovered fraud, that could be because you’re not looking hard enough, or you don’t have the right processes or people in place to identify them,” said Mark in a statement to Business Today. “Typically within our customer base, we see non-compliance at about 7%-17%. If you don’t see any non-compliance, you should then wonder whether your compliance programme has been set up well enough to catch it.”
Quoting a report from Association of Certified Fraud Examiners (ACFE) and Grant Thornton, Mark noted that 51% of organisations have uncovered more fraud since the onset of the pandemic, and 71% expect the level of fraud impacting their organisations to increase over the next year.
“What this has led to is more organisations investing in anti-fraud technology, and about 80% of organisations have implemented one or more changes to their anti-fraud programme,” he added.
Given the shift in business operations, employee embezzlement is expected to go up by 54% in the next 12 months.
“There might have been some flexibility in terms of purchasing work-from-home items or other employee appreciation-type items. That flexibility helps the mental health of the team, and improves employee experience, but without the corresponding controls, it presents risks to the organisation,” said Mark.
Citing ACFE’s Report to the Nations 2020 Asia Pacific Edition and Report to the Nations – 2020 Global Study on Occupational Fraud and Abuse, Mark pointed out that approximately 5% of total revenue loss can be attributable to fraud; of that loss, 16% to 21% (depending on organisation size) is attributable to expense reimbursement.
“When this occurs, 31% of the time it’s because of the lack of internal controls. It takes 24 months to find the misuse, and the average loss is USD$33,000 (approximately RM140,000), which is not a small amount. While people may be taking small amounts per expense report, those amounts can add up, and it typically takes a long time to be caught.”
The challenge is that most organisations have shifted to a shared-services model.
“Predominantly, they sit in one location and handle transactions from a multitude of geographies and locations. The challenge you have here is, firstly, you have limited resources in terms of the internal team to audit the transactions.
“So, you either have to rely on the managers to do the checks, or you can pick random samples for checking. Sometimes, when a person checking these receipts don’t have the relevant context. So they too are unsure whether it’s an appropriate expense or not. Oftentimes, a second check is run with the approval manager, and this becomes an expensive clerical exercise. Add to that language barriers, and the problem is compounded.”
SAP Concur can help organisations address those challenges, said Mark.
“Concur Expense makes it easy for you to capture expense data in a granular fashion through our mobile app, and automate the reconciliation of the receipts capture to your credit card data or P-card data. And that gives you a unified view of spend.”
“You become empowered with better visibility, more control, and can make better decisions, including negotiating with vendors, or deciding where to potentially drive cost-cutting measures. The solution platform is powered by AI (artificial intelligence) and ML (machine learning) to make the process even more efficient.”
Meanwhile, Concur Detect provides a global approach to review a high volume of expenses around the globe, prioritise exceptions with a certain level of confidence, and assess the potential impact.
“It is comprehensive because it looks at a variety of indicators, analysing the prior behaviour of the employee. And it goes beyond just looking at thresholds, such as. did I spend more than a hundred dollars on a meal? Lastly, Concur Detect provides configurability in terms of refining how the AI detection solution is working, and the results and parameters.”
The benefit of using an AI-driven approach is validating every expense report before the expense reimbursement happens.
“The solution helps the auditors to focus their time on resolving the risky transactions or line items, instead of wasting time on the rest. We’re detecting more risks along the payment life cycle. Essentially, we’re looking at trends – “is this employee a bad actor, or simply making occasional errors?” or “Is this an opportunity to revise our expense policy or educate/engage our employees to reduce these type of mistakes?”
Using SAP Concur brings other benefits to organisations as well, explained Mark.
“When you think of the AI-driven approach, and you’re partnering with a global solution vendor, the vendor is working with a larger training data set (and learns), and so outcomes can be better. But if you’re just building this in-house, you only have the data set within your organisation (to learn from).”
“When you’re looking at cost optimisation and driving cost efficiency within your organisation, we can help you increase savings by reducing wastage and reducing non-compliance. We reduce risk because we’re looking at every receipt, every transaction, which can lead to improved employee behaviour.
“Lastly, SAP Concur helps with streamlining the process. By doing a prepayment audit only on risky transactions, employees can be paid faster, and the team doesn’t have to spend as much time eyeballing all the receipts. They just have to do the research on the flagged transactions.”
