According to a 2004 ACFE survey, fraud cases increased 17% from 2002 to 2004 and the cost per incident went up 50% to $90,000 in 2004 signaling that fraud is an increasingly prevalent and costly issue for companies today. With decades of experience in travel expense and compliance management, Gelco solutions can help you prevent fraud or identify fraud faster within your organization.

Intelligent Workflow
Intelligent Workflow allows managers to easily identify potential cases of abuse and misuse of your company’s funds. When out-of-policy expenditures are quickly identified, managers can focus their time on increasing overall expense policy compliance and business ROI. Specifically, Intelligent Workflow allows you to:

• Configure the approval routing process by individual, group or department
• Configure the approval routing process by policy category
• Automatically flag expense reports that are out of policy

Intelligent Workflow ensures that managers focus their attention on the reports most likely to be suspect.

Gelco Reporting and Analysis:
Gelco Reporting and Analysis solution provides several reports that easily identify areas where spending is out of the norm. Consistently following up with employees on these policy exceptions, can reduce the likelihood of fraudulent activity. For more information on these reports, click on the links below.

Expenses out of policy
Expense details by representative
Distribution expense summary
Expense summary by category

Gelco Receipt and Audit Services:
Gelco Receipt and Audit Services provide great value to any organization that is serious about fraud deterrence. If you don’t already subscribe to our audit and compliance services you may be missing out on a very cost-effective way to outsource the audit function. As an unbiased third party, Gelco Receipt and Audit Services increases compliance with local and federal regulations as well as with your own travel policies. For our Receipt and Audit customers, Gelco:

• Scans, matches and stores all receipts according to IRS regulatory requirements and your company policy
• Displays receipt images along with the online expense report increasing visibility to travelers and managers during the approval process as part of our Intelligent Imaging service
• Provides images of all receipts on an indexed CD for easy oversight and retrieval
• Conducts customized audits based on company defined criteria as an unbiased third party
• Support government tax compliance and facilitates value added tax (VAT) reclamation

To further support your fraud deterrence efforts, we have compiled some frequently asked questions and hints on how to detect fraud:

How can my company prevent fraud?
There are several strategies companies can take to prevent travel expense fraud. It is important to define your expense policy in writing, communicate the policy to your employees and revisit policies often to keep them current. Instituting a corporate card program removes the cash incentive for fraud because employees need to use the corporate card instead of personal cards and cash where it is easier to hide fraudulent activity. Another strategy is to standardize the process globally to minimize the number of processes that need to be audited. Outsourcing the expense management process to Gelco mitigates the risk of collusion and makes expense management policy easier to standardize across your organization. Gelco’s SAS 70 Type II report also assures the company and its auditors of the high level of controls within Gelco’s processes.

What if my company has effective manual control processes in place today?
Often companies assume that the manual control processes they have in place are effective but according to the 2004 ACFE fraud report, only 42% of fraud is caught by internal audit of expense reports or internal control processes, the rest is usually luck. Automating processes and using a third party to pay and audit mitigates the risk of collusion, takes away worry about turning in fraud by senior management and allows you to focus on identifying at-risk situations in your organization.

Where should a company look to proactively identify fraud?
There is no magic answer, but companies should start by looking at high spenders and frequent policy violators as well as auditing paper documents for originality and validity.

What should I do if I suspect inappropriate action?
You should call an internal expert such as your legal department in addition to preserving the evidence. You should not publicly accuse the individual and you should investigate before you discipline the individual. For more information and recommendations, you can visit the ACFE website.

What are some common fraudulent activities?
One costly source of fraud is the airline ticket scam which is becoming easier to control with the advent of e-tickets. In an airline ticket scam, an employee purchases a full fare ticket which they return for cash or a credit voucher and purchases and travels on a second discounted ticket pocketing the difference. The transactions may be billed to a corporate card; however the company may or may not get electronic visibility to those purchases. The only way to verify a transaction like this is to perform a physical paper document audit on the receipt they submit after the fact. This is a situation where electronic controls and fraud activity tracking alone will never be able to fix the problem. One Gelco customer saved $13 million a year by eliminating this source of fraud and by adding an audit process on paper tickets. Stay tuned for upcoming Gelco service enhancements which will help companies deter this type of fraud even better.

In organizations where employees travel by car frequently, the fuel scam occurs when an employee uses a corporate card to purchase fuel for friends or family and pockets the cash. Analyzing the category spend report or auditing receipts can help identify this type of fraud.

Another example of fraud is when a manager directs his/her employee to pay for something, usually a meal, so they can later approve it. Identifying user patterns and performing audits could detect this type of activity.

Sometimes employees submit expense reports for trips they did not actually take. If your organization uses a corporate card, the individual would not receive monetary credit when returning tickets; the organization would be refunded. If you are not currently using a corporate card program there are several things you can do to gain visibility into this type of fraud. You can configure the expense report to require trip details or you can analyze top airline spenders to confirm that they also submit expenses for hotels and other trip related expenditures.