Fraudulent on credit card

In the previous month, a former researcher analyst for Bank of America provided us with the news that, he reported, he had put in more than $20,000 as personal expenses at some “ adult entertainment establishment” on the credit card of the company and then declined to repay it. This news gave alarm to the 2 costly problems which are 1- corporate credit card abuse and 2- fraudulent expense reports.

Anant Kale who is the CEO of AppZen exclaimed, “Nothing shocks me. It’s just how much is going through—that’s what surprises me—how far people can take it. If you’re not worried about expense report fraud, you should be”. Kale furthermore added, “Expense reimbursement fraud comprises 17% of all business fraud in this country, costing U.S. businesses billions of dollars per year. That’s real money and, for large corporations, could translate to millions in losses each year”. The above 2 problems can be troublesome to the internal affairs of the organisation.

The pandemic situation has turned everything more towards negativity. In accordance to the November 2020 Spend Insights Report, “Employees were given wide latitude to buy what they needed, and purchasing protocols were understandably more flexible as attention shifted. The focus was on business continuity first and foremost. Limits were certainly pushed in that hectic
environment, resulting in an extremely high volume of spend violations that exposed organizations to nearly two times the level of risk in Q2 2020 compared to Q2 2019.”

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The above-mentioned report provided us with more about fraudulent on credit card, “From big-screen TVs to sound bars, employees often bend the rules on equipment purchases [and] payment and procurement methods as they work from home. Expenses submitted as office supplies and meals/restaurants accounted for more than 25 percent of [spending] violations.”

The CEO of this report Terrence McCrossan said, “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 behaviours,”. He added more, “ 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,”

Fraudulent on credit card can be done in various shape and size. Mike Savage, who is the CEO of 1-800Accountant made a comment that, “Expense account fraud is a prevalent issue, in particular with small businesses [that] may not have adequate internal controls in place. The Association of Certified Fraud Examiners has reported expense reimbursement fraud accounts for 21 percent of fraud in small businesses.”

He said that the fraud expenses can also even take various forms such as, Fictitious expense, Miscategorization of expense, Duplicate expense and Nonarm’s length expense. Well, if their are fraud happening, then there are definitely certain anti-fraud measures against them. A certified fraud examiner and public accountant Angela Rice noted that, “an understanding for the employees to follow. Each employee should sign the expense report policy as evidence that they agreed to the terms. Awareness of what can and cannot be expensed, and guidelines on how to submit expenses help to prevent fraudulent on credit card”.

She gave advice as, “should be routinely audited for accuracy, supporting documentation, and adherence to the company’s expense report policy. When employees know that their expense reports are being audited they are more likely to avoid excessive spending at the company’s expense.”

Rice furthermore said, “All levels from senior management to the lowest level employee must be respectful of the company’s expense reporting policy. If senior management is not adhering to the expense reporting policy, they set the example that the company does not enforce its own policy and the abuse will likely trickle [down] to other employees.”

The principal-in-charge of the litigation support division (firm: MBAF) suggested few ways of prevention fraudulent on credit card. They are:
1. The procedures which the company is following should be such that it limits the total amount of expenses which can be submitted without any receipt.
2. Limits must be set on each person.
3. Define the acceptable reimbursements.
4. Fear of punishment for the ones who will violate rules.
5. Audits and validation techniques should be employed to know the actual spending.

As per Spends Insight Report November 2020 on fraudulent on credit card, there is always an increasing graph for such frauds. Therefore, it is necessary to be prepared with certain prevention which could combat the fraudulence happening with ease. Yes, this was it. If you find this article informative, let us know in the comment section. Do not forget! Take care!

Source: 2 Fraudulent Reports On Credit Cards Came Up As Per Spends Insight Report November 2020

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