Combatting Expense Fraud in Singapore | Summit

Expense fraud is a global problem, contributing to significant economic losses for those companies that fail to detect and tackle it. Singaporean companies aren't immune to expense fraud. 

The cases of a company cheated of almost $800,000 through 700 false travel expense claims, along with the infamous trial of a former protocol chief at the Ministry of Foreign Affairs making false claims for $89,000 worth of foreign diplomat gifts, highlight the need to tackle fraud, even if most cases are less severe. 

This article will explain common expense fraud tactics, spotting them, and how the right employee expense software can help eliminate them.

Understanding Expense Fraud

Common expense fraud tactics in Singapore include inflated claims, mischaracterised claims, doctored receipts, and double claims for shared bills. They can add up quickly. A 2019 study found that expense fraud in Singapore costs 3.45 times more than the lost transaction value, with the lost revenue from fraud amounting to 1.57% of total company revenue.

Unchecked expense fraud harms companies' overall productivity and employee satisfaction. Tedious, bureaucratic manual processes involving multiple expense claims are more vulnerable to fraud and delays than software-driven solutions. Managers and employees tasked with processing paper expense claims are more likely to make mistakes and become frustrated with the claims process's inefficiency.

A 2020 study by SAP revealed that Singaporean employees spend, on average, 2.7 hours a month filling expense claims, while managers spend 5.5 hours manually checking and approving them. This time could have been spent on revenue-generating activities, which equates to a loss in overall revenue.

Types of Expense Fraud

The most common types of expense fraud in Singapore include:

• Inflated Claims: Employees will inflate the actual costs of legitimate expenses, like hotel stays or meals, on their expense reports to make a profit. 
• Mischaracterised Expenses: Mischaracterised expenses that fall outside a company's reimbursement policy are falsely submitted as business expenses. 
• Fictitious Expenses: To pocket the reimbursement, employees may create fake receipts and invoices to claim for non-existent expenses, like taxi trips that never happened.
• Duplicate Submissions: Submitting the same receipt multiple times for reimbursement to different managers. Most of the time, duplicate submissions are errors, and because dates can be checked, they are easily unrecoverable. 
• Altered Receipts: Altering physical or digital receipts by adding a few dollars, a larger tip that was actually paid, or even removing alcoholic beverages from receipts if they are outside of company policy. 
• Company Credit Card Misuse: Employees can use a company that issues credit cards for personal purchases and try to hide them or make them appear like authorised purchases. 

Many of these examples are more often oversight than intentional fraud. However, each instance of unauthorised spending, deliberate or not, harms your company's bottom line and contributes to a culture of expense claim misuse among employees.

Detecting and Preventing Expense Fraud

Expense fraud can be hard to catch, especially if done on an infrequent, small scale and within allocated budgets. Accounting teams can be especially difficult to manually track dozens or hundreds of employees' expense claims processes. It's also harder to detect patterns for irregularities with manual expense claims systems, making double claims and inflated claims easily pass through. 

However, there are ways to ensure policy compliance with AI-powered account reconciliation software in a centralised, streamlined format.

Ways to Prevent Expense Fraud

Your business can prevent expense fraud by implementing the following practices:

1. Having a Well-Defined Expense Policy
   Employees who understand the company expense policy, which clearly outlines legitimate reimbursable expenses, documentation requirements, and approval processes, can significantly reduce fraud. Ensure you regularly update the policy to meet business and compliance regulation needs and make it easily accessible to all employees. 
   
   
2. Conduct Regular Expense Audit
   Regular expense audits can identify discrepancies or misconduct patterns to help prevent employee expense fraud. This process involves collecting all expense reports for a specific period, reviewing them for compliance, verifying that all expenses have proper documentation, and performing data analysis. Effective invoice management software will offer a centralised solution to audits with instantly generated analysis to save your accounting team time and effort. 
   
   
3. Create Solid Internal Controls
   Implementing strong internal controls could involve requiring multi-level approvals for large expenses to prevent fraudulent claims. Also, ensure that you set clear consequences for those found committing fraud to deter other employees from violating your policy.

How Summit's AI-powered Policy Checker Can Prevent Expense Fraud 

Summit's Employee Expense Management software provides Singaporean businesses with a centralised platform on desktops and smartphones to submit expenses and ensure compliance. This video demonstrates how it automates spend category selection, prefills information, and checks claims against the policy in real time before submission with AI-powered ruled-based automatic approvals. Summit eliminates the risk of fraud, leaving digital audit trails that remove the chance of human error. 

Summit's Vendor Invoice Management also reduces the risk of fraud by automating the procure-to-pay process. With automated approvals and three-way matching, manual data entry is eliminated, compliance with procurement policies is ensured, and supplier relationships are improved. 

If you want to try Summit's management software to eliminate the risk of fraud in your employee expense claims and vendor invoices, contact us to talk to one of our representatives. We'll schedule a free demo and are more than willing to answer any questions you have about our products. Talk to us today!