Tuesday, November 20, 2018


Many companies, including Government contractors and subcontractors, spend significant amounts of money to fight fraud, waste, and abuse within their organizations. Not only do companies spend resources to establish internal controls that help prevent (or reduce) fraudulent activities but they spend significant sums for internal audit functions such as auditing travel vouchers.

Fraud, or the potential for fraud, is a significant problem for all companies. Read the 2018 Report to the Nations published by the Association of Certified Fraud Examiners and you might be surprised as to how pervasive occupational fraud really is and who the perpetrators tend to be.

Within the past couple of years, new tools have come to market that should help companies identify occupational fraud. These tools, somewhat expensive and designed for larger companies at this time, utilize AI (artificial intelligence) algorithms to identify fraudulent claims and forged receipts that are often undetectable to human auditors without hours of tedious labor. This is sometimes referred to as "robo-auditing".

Two of those companies are AppZen and Oversight Systems. AppZen claims it has already saved its clients $40 million in fraudulent expenses. Oversight also claims significant ROI (return on investment).

Travel and expense embezzlement typically accounts for about 14 percent of employee fraud and it is becoming easier to fool finance departments thanks to websites such as "fakereceipts.us" that make it easy to create a bogus paper trail. AppZen and Oversight claim that their algorithms can identify those kinds of excesses.

Here's a listing of what these products claim to be able to expose:

Expense report fraud

  • travel and booking violations
  • excessive meal and alcohol spending
  • weekend purchases
  • unnecessary upgrades
  • out-of-policy spending
  • suspicious merchants
  • anti-bribery and corruption
  • duplicate expense claims

Invoice and contract fraud

  • discount term violations
  • non-applied rebates
  • duplicate invoices and charges
  • tiered pricing violations
  • suppliers and vendor fraud
  • most favored nation pricing
  • payment term violations
  • anti-bribery and corruption
As we stated earlier, these products are cutting edge and probably not cost-effective for small contractors at this time. But it might be, depending upon whether your company reimburses a lot of travel or purchases significant materials. 

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