A number of high profile expenses fraud prosecutions are prompting insurance companies to take a new tougher stance with employees in the area of recording/submission of expense claims. Specifically, insurance companies must keep detailed records of corporate entertainment (however small) whilst at the same time, making sure that corporate expense policies are adhered to by staff. Critically, all of this needs to be achieved without imposing a huge administration burden upon line managers.
It is clear that many existing methods of submitting expenses and hospitality & entertainment recording are inadequate. With many insurance companies using simple spreadsheet based information recording, it is far too simple to bypass corporate policies. Individuals with corporate credit cards often take months to provide information, while managers tasked with authorising expense claims rarely have the time or inclination to plough through the detail of each claim to ensure compliance.
With these types of systems it is at best difficult, at worst impossible to pick up trends in spending behaviour or patterns of entertainment. Information is usually summarised into a few lines on the general ledger and the organisation can only see rounded up expenditure figures. With no link between expense claim and finance or purchasing systems, there is a real potential for unintentional non-compliance or even systemic abuse, either of which could result in significant corporate overspend.
Insurance companies now need to impose far more rigorous control over the recording of employee activity, streamlining processes through automated reconciliation wherever possible. But given the massive cultural resistance across many business sectors, just how hard will companies push? Will organisations enforce the zero tolerance model – or simply hope for incremental cultural change? In the wake of such high profile employee fraud cases, is it really worth the risk of sitting back and hoping for the best?
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