A lot of large companies may have rigid expense management guidelines in place as well as controls for making sure they’re followed, but only when it comes to the lower level employees. There tends to be a feeling with regards to upper management that the rules don’t apply to them, unfortunately.
This can result in blatant fraud, but more likely than that is the fact that sometimes upper management and executives honestly just don’t think about the details of their expense management because they’re focused on other things, or they’re not held accountable.
Whether it’s purposeful or inadvertent when upper management doesn’t follow the expense reporting rules, it can cost money, but it can also have an impact on employee morale and corporate culture.
The following are some things to keep in mind with expense reporting and company leadership.
Make It Easy with Expense Software
If your organization is finding it difficult to enforce reporting rules with the leadership within the company, expense software can be helpful.
It makes it easier for busy executives to track their spending, and it’s a good way to improve overall accountability as well as transparency. Plus, if there ever is a compliance issue that arises, expense software will make it easier to look into and see what happened, whether the investigation is internal or external.
The Risk of Fraud
It’s important for finance and compliance teams to be aware that the risk of expense fraud does exist among upper management.
According to the Association of Certified Fraud Examiners, the executive and upper management areas of a company account for 27 percent of fraud cases related to expense reimbursement. That’s more than a quarter of all cases, so it’s something to be aware of.
Each reported case of expense reimbursement fraud averaged a loss of $30,000, and the majority of cases involving expense reimbursement were directly related to T&E reimbursement.
Also, research shows that the higher the level of authority, the higher the amount of the loss a business incurs as a result.
Train Upper Management
There is an idea that upper management teams and executives don’t require training. They’re the ones who are theoretically the most educated and experienced in an organization, but this doesn’t mean training isn’t needed.
Require upper management personnel to be trained and regularly retrained on expense management protocols and practices, as well as how to adhere to company guidelines.
Finally, there needs to be a sense of accountability and transparency across an organization, and this includes employees at all levels.
We’re at a place in business right now where there is a lot of employee frustration because there’s a sense that executives aren’t held to the same standards as everyone else, and there’s also the feeling that there’s a lack of transparency as to what executives are doing and the money they’re making.
A good general thing to tackle in 2018 for any business is improving the sense of accountability and transparency across all levels of the organization, which will not only help reduce potential expense management fraud and waste but also make for a healthier corporate culture.