Risk-proof your travel and expense audit process

A report by the Association of Certified Fraud Examiners states that global enterprises lose $7 billion annually to workplace fraud, with expense reimbursements being one of the most commonly used fraud and corruption schemes across regions (from 9-17%) and across industries (from 7-30%).

Financial loss from fraudulent and non-compliant travel and expense (T&E) claims is significant. T&E leakage adversely impacts a company's bottom line, as T&E spend accounts for 6-12% of companies' annual spend. Government agencies are clamping down on non-compliance by monitoring spend more closely – and firms that fail to meet the new standards face hefty fines, loss of market reputation, and trust. As anti-bribery and anti-corruption (ABAC) regulations across the globe continue to evolve and become more stringent, organizations are actively looking to expand regulatory risk coverage to T&E reimbursements as it has been a channel for routing bribes and improper payments.

Based on our recent survey, more than 50% of companies still relied on costly and inefficient manual T&E audit processes and only perform receipt validation and policy compliance checks.

Most organizations cited disparate T&E data sources and formats (Concur, Workday, Oracle, legacy systems, Excel worksheets) as limiting to the ability to have a unified approach. And many identified decentralized T&E review across operating geographies, languages, and other regional nuances as another big challenge.

The high deployment cost of digital technologies such as artificial intelligence (AI) and analytics without a definite ROI measure was also seen as a barrier against moving to analytics-based audit solutions.

Add the lack of expertise in the risk and compliance function to perform root cause and spend pattern analyses, and it becomes impossible for organizations to drive policy, process, and behavioral changes to enable compliance.

Genpact designs its solutions to meet every challenge head-on. To provide comprehensive coverage, our T&E audit solution combines analytics, AI, and machine learning, along with risk and compliance expertise to keep your T&E spend compliant and in check.

The solution pulls data into Genpact Cora's analytics platform from disparate T&E systems while checking for anomalies. It uses corroborative logic-based advanced analytics (customized algorithms covering regulatory, fraud, and policy compliance reviews) and language neutralization tools to analyze multi-lingual T&E data sets. It reviews data through a proprietary keyword search list and external data sources, including specially designated nationals (SDN), Office of Foreign Assets Control (OFAC), and politically exposed person (PEP) lists, to identify fraudulent or unallowable transactions or transactions with suspicious and blacklisted vendors.

Based on the analytics results, an automated sample generator selects high-risk transactions for substantive testing. Genpact's AI-based Behavioral Science Score (GBSS) and machine-learning capability further helps to evolve and improve exception generation over time and reduce the number of false positives.

Furthermore, our solution allows you to deliver clear and actionable insights through interactive dashboards and comprehensive audit trails with an in-depth root cause analysis and action plan, allowing you to focus on non-compliant behavior and drive process and policy changes. This ensures quick action and remediation while continuously boosting compliance and preventing similar issues from occurring in future.

A leading global aviation company with more than $10 billion in revenue struggled with manual testing of T&E transactions and lacked the ability to detect fraud with no standard format for reporting non-compliant transactions and repeat offenses. This meant an inefficient T&E audit process, inadequate risk coverage, and spend leakages. The company ran the risk of not complying with regulations such as the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act.

We reviewed the company's existing policies and procedures and introduced our T&E audit solution (Regulatory Fraud and Policy Monitor) to tackle the issue. It used fuzzy and phonetic logic-based keywords and policy-related data analytics to analyze 100% of the payments pertaining to corporate cards, disbursements, wire transfers, petty cash, and more. We also carried out substantive testing and interviews with cardholders and reviewed expenses for improper and non-compliant payments and incorrect accounting, and tested existing controls.

Here's what we delivered:

• Identified unauthorized, fraudulent, or improper T&E expenses that were against FCPA norms
• Minimized the misuse of corporate cards and disbursements that were non-compliant
• Recovered funds and reduced the non-compliance rate by 13% over a period of five years
• Improved awareness in the company about improper payments such as gifts to customers, government officials, and charitable organizations

Our solution can not only save 2-3% of your annual T&E spend, but it can also significantly enhance risk coverage by detecting fraud and non-compliant T&E expenses. It reviews 100% of transactions and quickly identifies wasteful, duplicate, and non-compliant expenses, causing regulatory risk, fines, and audit costs to drop dramatically. It automates 70% of the manual activities, allowing people to focus on higher-value work. And the interactive dashboards provide real-time visibility to leadership for better transparency and governance.