Accounting
Business Spending Report Shows Fraud, Waste and Misuse Increasing
From big-screen TVs to soundbars, employees often bend the rules on equipment purchases, payment and procurement methods as they work from home. Expenses submitted as office supplies and meals/restaurants accounted for more than 25% of spend violations.
Nov. 17, 2020
A new report details ongoing rise in corporate fraud, waste and misuse despite overall spend reductions during this unprecedented work environment. The November 2020 Spend Insights Report, from Oversight, a provider of spend management and risk mitigation technology, offers a year-over-year analysis of Q3 spend data. This indicates that risk is accelerating, and that cash flow and controls continue to be significantly impacted. Fourth in a series, November’s report seeks to answer a simple question: why is risk rising dramatically against a backdrop of reduced spending?
Among the key findings:
- T&E Spend Drops, Risk Triples
A 77% decrease in travel and expense spend was counteracted by an alarming year-over-year increase in spend risk, which was three times higher than in Q3 2019.
- Fraud Activity Violations More than Double
Fraud activity violations increased 57% from Q2 to Q3 2020 to remain the most prevalent type of spend risk since the pandemic. Spend at electronic, computer and package stores triggered the majority of these violations.
- Ongoing work from home arrangements open the door to out-of-policy spend
From big-screen TVs to soundbars, employees often bend the rules on equipment purchases, payment and procurement methods as they work from home. Expenses submitted as office supplies and meals/restaurants accounted for more than 25% of spend violations.
“The reality is that the pandemic has brought a 12% increase in new spenders, and introduced new patterns of risk that need to be accounted for,” said Terrence McCrossan, CEO of Oversight. “These risks are not subsiding and organizations are beginning to recognize that their existing policies and audit processes are not sufficient for controlling these new behaviors. To combat this, we’re working with organizations on suggested changes to policy, adjustments to audit approaches, and other recommended actions to target these new risk profiles more effectively.”
For the full November Spend Insights Report and other best practices for addressing the changing dynamics of spend risk, visit https://explore.oversight.com/spend-insights-report-november-pdf.