Expense fraud remains a pressing problem for companies globally, especially with the economic downturn brought about by the COVID-19 pandemic. With an estimated 13.2% contraction of the economy in the latter half of 2020, the onset of the pandemic has brought about Singapore’s worst economic recession to date.¹ Expense fraud further contributes to significant economic losses for companies that fail to detect it, making it more crucial now than ever to tackle this challenge.
Expense Fraud in Singapore
Singapore is no stranger to expense fraud. Extreme cases reported include a woman who cheated her employer of nearly $800,000 through 700 false travel expense claims² and the Ministry of Foreign Affairs’ chief protocol who falsified expense claims amounting to $89,000. ³ While these cases seem far-fetched, their scale attests to how easily expense fraud slips under a company’s radar.
Common expense fraud tactics include falsified claims (e.g., doctored receipts), double claims by different employees for a shared bill, inflated claims, and mischaracterized claims. These add up quickly, with nearly 400 successful fraudulent claims processed monthly across Singapore, Indonesia, Malaysia, and the Philippines. For Singapore, expense fraud costs approximately 3.45 times more than the lost transaction value, and the loss of revenue from fraud amounts to approximately 1.57% of total company revenue.⁴
Likewise, unchecked expense fraud hampers a company’s overall productivity as well as employee satisfaction. The manual processes involved in filing expense claims are often tedious and hindered by bureaucratic delays. Both employees and the managers tasked with processing expense claims feel mounting frustration due to such inefficiency. In particular, Singaporean employees spend an average of 2.7 hours per month filing expenses, while Singaporean managers spend an average of 5.5 hours per month manually checking and approving these expense claims.⁵ This results in a net loss of employee productivity that equates to a loss in overall revenue.
Expense Fraud in the Pandemic
The ongoing pandemic and regulations that mandate working from home make expense fraud even harder to detect. Following last year’s Circuit Breaker, many Singaporean companies have offered their employees an allowance for purchases that ease the transition into working from home. While one-off claims of essentials such as computer monitors and ergonomic office chairs are unlikely to be fraudulent, recurring expenses such as software subscriptions can be double-billed or appropriated for personal use.
There is also an incentive to claim superfluous expenses incurred while working from home: Singaporean employees may claim these expenses for a tax deduction against their total employment income.⁶ For employers who fail to accurately detect expense fraud, economic losses continue to compound throughout the pandemic.
Streamlining the Detection of Expense Fraud
Expense fraud, especially when done on a small scale and infrequently, can be hard to catch when employees are careful to keep fraudulent claims within their allocated budgets. Often, there are many employees to manually keep track of in processing expense claims. It thus becomes difficult to monitor varying spending patterns for irregularities that may be flags for expense fraud. Similarly, common tactics like double claims and inflated claims easily pass through as it is cumbersome to manually verify employees’ claims against each other.
Ultimately, failing to nip expense fraud in the bud leads to significant losses of both time and money. Many companies have thus turned to Jenji as their all-in-one expense management solution. Jenji’s cutting-edge AI technology accurately analyses spending behavior and extracts information from physical bills and receipts for a holistic and thorough overview of a company’s financial health. Even infrequent patterns of expense fraud can be precisely detected and flagged with real-time alerts for abnormal spending patterns. With the added ability to perform audits at both micro and macro levels, cost optimization can be tailored to any company’s needs. Investing in such digital solutions powered by innovative technology is hence crucial in efficient expense management that simultaneously prevents expense fraud and frees up employee time for increased productivity.
For more information on the Jenji Platform, don’t hesitate to request for a free demo or drop the Jenji team a message at firstname.lastname@example.org. We look forward to collaborating with you!