White paper uncovers occupational fraud risk

Australian and New Zealand organisations face an increased risk of occupational fraud due to the combined factors of the shift to remote work and sustained political and economic volatility, according to a new SAP Concur white paper.

The ‘Preventing and detecting occupational fraud in remote-based workplaces’ white paper highlights the risk of occupational fraud to organisations and provides insights about how businesses can protect themselves from the threat of fraud.

Jonathan Beeby, managing director, SAP Concur Australia and New Zealand, said employee fraud can be difficult to discern.

“It can be difficult to identify a fraudster, especially when they are a colleague who has worked with the organisation for many years. However, financial and personal challenges that people have faced since the pandemic began have led some employees to act uncharacteristically when it comes to occupational fraud.”

The consequences of employee fraud for organisations can include regulatory compliance breaches, business inefficiencies, reputational damage, and impacts to the workplace experience of other employees.

The top five areas of employee fraud are:

1. Fraudulent expense claims, where an employee will submit a claim for a business expense they never actually incurred. For example, booking business flights and accommodation on their credit card but then cancelling the trip and keeping funds from the expense claimed.
2. Non-compliant expenses. SAP Concur has found that 22% of expense claims don’t comply with company expense policies, and 50% of these relate to hotel bookings where business travellers circumvent corporate booking processes.¹
3. Fake and duplicate invoices where the fraudster sends a legitimate-looking invoice to the company for an expense that the company never actually incurred.
4. Business email compromise is used by fraudsters to redirect legitimate fund transfers to alternate accounts. Legitimate emails and invoices are intercepted, and banking details are changed to include fraudulent payment information.
5. Double processing in which many organisations can inadvertently pay the same invoice twice, particularly when using manual, paper-based processes. Fraudsters take advantage of these outdated processes by producing one invoice for services or goods, and then sending the same invoice to numerous companies. Whichever business pays becomes an ongoing target.

“Fraud can be very difficult to quantify accurately, considering the Australian Competition and Consumer Commission estimates only 13 per cent of fraud victims report the loss.² Many others either accept a small degree of fraud in their organisation or are simply unaware that it has happened.

“The most effective way to prevent and detect fraud is by automating finance processes using purpose-built tools that are specifically designed to mitigate the risk of occupational fraud. This helps prevent out-of-policy or duplicate spending before it can happen.

“When combined with employee education about the risk and impacts of fraud, as well as cybersecurity measures, this delivers the strongest possible protection against fraud from both within the organisation and externally,” Beeby said.

References
1 https://www.concur.com.au/resource-centre/whitepapers/preventing-and-detecting-occupational-fraud-australian-and-new-zealand-organisations
2 https://www.accc.gov.au/taxonomy/term/160

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