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Answer Upon - What is Company Fraud and How Do You Stop It? (Part 2 of 2)
In an age of rampant documentation puffery and legal complications in dealing with employees, it's more important than ever to know who you're hiring. A basic background employment check can verify who the person you're considering hiring really is and if their credentials match up with the application and resume.Over the past few years pre-employment background checks have gained in importance for all employers no matter what the size. This is especially true of employers who are halos defense contractors or work for some aspect of the government. This would include security personnel at airports and even manufacturing people working on defense contracted parts for military equipment.Companies typically do the validation and background check internally or outsource it to an investigation service. Either way brings a measure of due diligence that the company can relay on in the event that something negative should occur.Background checks are typically done following the guidelines and requirements of the Fair Credit Reporting
In practice, these corporate expense management software processes, controls, and procedures are very broad. They relate to items such as approvals, authorizations, verifications, reconciliations, segregation of duties, reviews of operating performance, background investigations, and physical security. They need to be embedded in your day-to-day management and monitoring processes, and they need to also leverage available information technology.
One of the key faults of many entrepreneurs is that they create a job rather than a business.It all seems to make sense in the beginning. You’ve started your business and you do everything from the accounts, to the marketing, to the sales and making coffee. It saves additional costs and you know the business better than anyone else. As you grow your business, you may take on extra staff for certain tasks and you gradually let go of the areas that you’re weakest on. But you still like to be involved in everything.After all, it’s your business, your investment, your baby. What if someone else doesn’t take as much care of it as you would? What if someone else neglects it? So you keep your finger in every pie and make sure you’re consulted on every decision.And what does this do to the staff you employ? If they know you’re checking everything then it can cause them to become conscientious and make sure that every thing is ship-shape and proper before it gets to you. However, if they’re doing it just to avoid getting caught
There are two main steps required to stop fraud in your company: Step 1 - identify your fraud risks; Step 2 - implement corporate expense management software controls to minimize those risks.
STEP 1 - Identify Your Fraud Risks
Is your company vulnerable to any of the following?
- Variances between hardcopies and computerized reports;
- Departure and return airfare on different dates but with no corresponding hotel expenses;
- Meals on weekends or in non-work locations;
- Poor descriptions and incomplete documentation such as a missing boarding pass, itinerary or receipt;
- Dates out of sequence;
- Old receipts;
- Nasty or inconsistent explanations to questions regarding claims. A common response is "how dare you question me?" ;
- Copies;
- Altered receipts;
- Credit card statements or printouts instead of receipts;
- Airline tickets:
- Employees have been known to pay for airline tickets using frequent flyer points and then claim the cost of a ticket as an expense from the company. This can be considered a fraudulent activity;
- There are numerous mechanisms employed to defraud an organization through the use of airline tickets. Organizations need to be diligent when dealing with airline ticket exchanges, refunds, partial refunds and possibility the flight being claimed was not taken (evidence of car rental, parking at the home airport, meals or other expenses in the destination are not present).
- Duplications to watch out for:
- These may not be identical amounts as in the case of partial hotel bills;
- Past due charges on mobile phone bills;
- The same expense may be reported twice in one period or in two or more periods with a different description and coding.
- Claiming personal items can also be a source of fraud against the company. These can include:
- Travel for family members;
- Retail or personal purchases;
- Excursions added on to business trips;
- Extra days in a hotel, car rental etc.;
- Gift shop, massages, etc. may be included on a hotel bill;
- Non-authorized trips.
- Organizations should also be diligent in identifying expenses being claimed that were not incurred. This is especially relevant when related to the claiming of meal expenses and meal per diem expenses;
- Inconsistencies such as taxi and rental car claims for the same portion of trip or mileage calculations that are clearly inflated;
- Overstatements may or may not be deliberate, however they include typographical errors ($34.95 reported as $3,495) and incorrect exchange rate conversions.
There are numerous other less obvious activities that fail to comply with legislative and/or company policies. Examples of these failures include improper coding, such as: hotel bills that include meals, phone, etc., that are reported as lodging; car rental which may not fall into a company authorized class; and the use of prohibited vendors.
STEP 2 - Implement Corporate Expense Management Software Controls
In order to minimize the risk of fraud in your company, your corporate expense management software controls should be designed to provide and support the 5 W's (Who, What, Where, When, and Why). They must ensure that all reasonable, authorized expenses incurred in order for a staff member to perform their job responsibilities are paid with the corporate credit card and documented with an original, valid, unaltered receipt, and they must be implemented throughout the entire organization, at all levels and in all functions.
In practice, these corporate expense management software processes, controls, and procedures are very broad. They relate to items such as approvals, authorizations, verifications, reconciliations, segregation of duties, reviews of operating performance, background investigations, and physical security. They need to be embedded in your day-to-day management and monitoring processes, and they need to also leverage available information technology.
A knowledge of the commercial uses of gold enables a savvy investor to make a judgement on the future demand for the metal and in conjunction with other criteria such as the erosion of the purchasing power of a currency, political factors, gold hoarding or selling off by governments, the technical picture, etc.etc., can make the decision to be long, short or stay out of the market until a more favorable opportunity occurs.Basic InformationChemical Symbol: Au
Atomic Number: 79
Melting Point: 1947.97 Degrees Fahrenheit, 1064.43 Degrees CentigradeMedicineGold is non toxic and biologically benign, an excellent conductor of electricity, virtually indestructible, easy to shape and flatten and can be drawn out into microscopically thin strands known as bonding wire.The most well known use of gold in medicine is in dentistry. The metal is combined with other metals such as platinum, silver, copper zinc or palladium to produce non-toxic, chemically inert alloys that are easy for dentists to work with and are strong
There are numerous other less obvious activities that fail to comply with legislative and/or company policies. Examples of these failures include improper coding, such as: hotel bills that include meals, phone, etc., that are reported as lodging; car rental which may not fall into a company authorized class; and the use of prohibited vendors.
STEP 2 - Implement Corporate Expense Management Software Controls
In order to minimize the risk of fraud in your company, your corporate expense management software controls should be designed to provide and support the 5 W's (Who, What, Where, When, and Why). They must ensure that all reasonable, authorized expenses incurred in order for a staff member to perform their job responsibilities are paid with the corporate credit card and documented with an original, valid, unaltered receipt, and they must be implemented throughout the entire organization, at all levels and in all functions.
In practice, these corporate expense management software processes, controls, and procedures are very broad. They relate to items such as approvals, authorizations, verifications, reconciliations, segregation of duties, reviews of operating performance, background investigations, and physical security. They need to be embedded in your day-to-day management and monitoring processes, and they need to also leverage available information technology.
Sponsoring is one of the ways to build and fortalice a brand. And sport is always a good target. But sport it not the only target. Sponsorship at ING consists of three main programmes: sports, art and culture, and community development. states the ING sponsor policy. (http://www.ing.com/group/showdoc.jsp? menopt=spr&docid=074368_EN&lang=EN)Running has been ING’s main target for sponsoring sports events; because it is a sport of universal appeal, practiced by and accessible to millions of people across the globe … One of the largest events in our programme is the ING New York City Marathon.Running is one of the healthiest sports there is, healthy in many senses: it is a sport that can be practiced indoors, in nature, on the street (New York) and nearly everybody can join and it doesn't require any fuel.Only recently, ING added a new sport to its sponsorship portfolio and that is Formula One, by sponsoring the Renault F1. Renault has been looking for a new sponsor as the tobacco sponsors (Mild Seven) are banned from xpenses in the destination are not present).
There are numerous other less obvious activities that fail to comply with legislative and/or company policies. Examples of these failures include improper coding, such as: hotel bills that include meals, phone, etc., that are reported as lodging; car rental which may not fall into a company authorized class; and the use of prohibited vendors.
STEP 2 - Implement Corporate Expense Management Software Controls
In order to minimize the risk of fraud in your company, your corporate expense management software controls should be designed to provide and support the 5 W's (Who, What, Where, When, and Why). They must ensure that all reasonable, authorized expenses incurred in order for a staff member to perform their job responsibilities are paid with the corporate credit card and documented with an original, valid, unaltered receipt, and they must be implemented throughout the entire organization, at all levels and in all functions.
In practice, these corporate expense management software processes, controls, and procedures are very broad. They relate to items such as approvals, authorizations, verifications, reconciliations, segregation of duties, reviews of operating performance, background investigations, and physical security. They need to be embedded in your day-to-day management and monitoring processes, and they need to also leverage available information technology.
Enterprise content management systems help companies control, manage, utilize and share essential information, thereby optimizing the business process. It integrates with the organization’s applications, enhances the agility of content delivery to users, mitigates risk, and eliminates redundancy largely.It is essential that companies select the right enterprise content management system (ECMS) as the cost of installing the ECMS can be hefty and an ECMS that is unsuitable for the business can be a very costly mistake. The type of business and how installing an ECMS will affect the business both need to be analyzed. All of the important stakeholders have to be involved in making the choice to select the right enterprise content management system.
It will help if the company creates a list of its requirements.Requirements of a Good Enterprise Content Management System:
The most important users of an enterprise content management system are the content creators. All areas within the system have to be analyzed carefully to see what effect related to the claiming of meal expenses and meal per diem expenses;
There are numerous other less obvious activities that fail to comply with legislative and/or company policies. Examples of these failures include improper coding, such as: hotel bills that include meals, phone, etc., that are reported as lodging; car rental which may not fall into a company authorized class; and the use of prohibited vendors.
STEP 2 - Implement Corporate Expense Management Software Controls
In order to minimize the risk of fraud in your company, your corporate expense management software controls should be designed to provide and support the 5 W's (Who, What, Where, When, and Why). They must ensure that all reasonable, authorized expenses incurred in order for a staff member to perform their job responsibilities are paid with the corporate credit card and documented with an original, valid, unaltered receipt, and they must be implemented throughout the entire organization, at all levels and in all functions.
In practice, these corporate expense management software processes, controls, and procedures are very broad. They relate to items such as approvals, authorizations, verifications, reconciliations, segregation of duties, reviews of operating performance, background investigations, and physical security. They need to be embedded in your day-to-day management and monitoring processes, and they need to also leverage available information technology.
As in any aspect of life, if you want to get somewhere, you have to know where you are going. Otherwise, you get the results you've always gotten and wonder why things never change.The same is true when designing training programs. In my field of performance consulting, I often talk to prospective clients about their past failed training programs. The comment usually sounds like, "Well, we tried that before and it just didn't work." My response is to find out what preparation was done prior to creation and delivery of the training.In most cases, where "training" failed, the reason for the training was not properly identified and clearly linked to the business requirements. Or, management threw training at the problem, without truly assessing and understanding the core problem. Training programs that lack a connection with an established business objective are often doomed before they begin!Key Questions Prior to Training Development1. What business problem are you trying to solve?2. Will all levels of the organizatigement software controls should be designed to provide and support the 5 W's (Who, What, Where, When, and Why). They must ensure that all reasonable, authorized expenses incurred in order for a staff member to perform their job responsibilities are paid with the corporate credit card and documented with an original, valid, unaltered receipt, and they must be implemented throughout the entire organization, at all levels and in all functions.
In practice, these corporate expense management software processes, controls, and procedures are very broad. They relate to items such as approvals, authorizations, verifications, reconciliations, segregation of duties, reviews of operating performance, background investigations, and physical security. They need to be embedded in your day-to-day management and monitoring processes, and they need to also leverage available information technology.
Segregation of Duties as a Corporate Expense Management Control
Given the nature of accounts payable and the related functions, segregation of duties is a crucial consideration. Following is a partial list of duties related to accounts payable and how they should be segregated.
- The person responsible for bank reconciliation should not:
- Handle unclaimed property reporting
- Be a signature on a bank account
- The person who is check signature should not:
- Authorize invoices for payment on an account that he/she is also a signature
- Have ready access to the check stock.
- A person who is responsible for the check stock should not:
- Be an authorized signature
- Handle the bank reconciliations
- The person responsible for the master vendor file should not:
- Be an authorized signature
- Be able to approve invoices for payment
- Handle unclaimed property
- Individuals responsible for accounts payable functions should not also be responsible for accounts receivable.
Other Corporate Expense Management Controls
Some other corporate expense management controls that are helpful in combating fraud include:
- Requiring business purchases be made on a corporate credit cards
- Monitoring transactions on the corporate credit cards
- Direct pay of corporate credit cards
- Pre-population of corporate credit card data in expense report preparation
- A good system of approvals to prevent unauthorized reimbursements
- A thorough review of an individual's expenses over a period of time
- Implementation of a PostProcurement environment (historically we have been working in a pre-procurement environment (Purchase Requisition, Order, Receipt, Remittance, 3 Way Matching, Journal, etc.) which can lead to at least 20% of transactions being disputed.)
Corporate Expense Management Software
Corporate expense management software automates the management of expense claims, significantly reducing the risk of error or fraud and comprehensively managing all purchasing data. A good corporate expense management software solution can reduce processing costs by as much as 90%, so the payback period is tangible and measurable (often less than 6 months).
When choosing a corporate expense management software solution, ensure that it can manage digital data from a range of B2B transactions including purchasing cards, travel expense cards, fleet cards, mobile phones, and Internet purchasing. Information can then be integrated into operating systems including human resources, accounts payable, general ledger, and ERP. Furthermore, make sure that it accommodates all major credit card transactions, that it is non-bank specific, and that it can operate with the world's leading ERP systems.
And finally, before choosing your corporate expense management software solution, consider the fact that technology is not the entire story in achieving corporate expense management outcomes. Cultural issues, resistance to change and corporate ownership are the greatest barriers to the growth of card programs and the realization of benefits. You must be confident that your corporate expense management software solution provider has a customer-focused consultancy based approach to client relationships of which technology is only one very important part.
Conclusion
Fraud is a significant cost to many (if
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