Following a series of high profile prosecutions, a number of businesses are now claiming a zero tolerance approach to employee expenses fraud. But just how is that model going to be enforced? For companies built upon wining and dining suppliers, customers and business partners, both within the UK and internationally, the challenges are both cultural and procedural.

Organisations need to put in place robust employee expense and entertainment recording, analysis and reporting mechanisms today to reinforce cultural change and minimise the risk of expense abuse.

Employee Spotlight

A number of high profile expenses fraud prosecutions are prompting companies to take a new, tougher stance with employees. Aviva has recently announced a ‘zero tolerance’ policy towards financial crime of any sort following the successful prosecution of an employee for just under £20,000 of fraud, including expenses for cricket matches and journeys that had not been made, and appropriating Marks & Spencer vouchers intended as staff rewards.

For companies that have built business opportunities on entertainment and strong inter-personal relationships, the implications of zero tolerance are significant. Businesses are now looking to rigorously record corporate entertainment and ensure that activities such as upgrading flights and hotel rooms without authorisation are impossible. Critically, however, this has to be achieved without imposing a huge administration burden upon line managers.

Recording Expenses

It is clear that many existing methods of submitting expenses and hospitality & entertainment recording are inadequate. Most organisations have processes in place, even centralised purchasing of items such as travel and hotels, in order to impose some control over expenses.

But, in reality, abuse of the system is rife: individuals will continue to purchase upgrades using company credit cards, secure in the knowledge that there is no simple way to link the charge to the original flight booking.

With simple spreadsheet based information recording it is far too simple to bypass corporate policies. Individuals with corporate credit cards often take months to provide information, while managers tasked with authorising expense claims rarely have the time or inclination to plough through the detail of each claim.

With these types of systems there is no way of picking up trends in spending behaviour or patterns of entertainment. Information is usually recorded on a spreadsheet and summarised into a few lines on the general ledger: the organisation can only see rounded up expenditure figures. With no link between expense claim and finance or purchasing systems, the result is the real potential for systemic abuse and significant corporate overspend.

Employee Control

Businesses now need to impose far more rigorous control over the recording of employee activity, streamlining processes through automated reconciliation wherever possible. Linking the employee expense management system directly with the travel agent or flight booking system or even having the company credit card statement automatically loaded into the expenses form, will provide the transparency required to remove the chances of employees upgrading without authorisation, for example.

Should an employee try to upgrade a flight or hotel booking using a credit card, the cost will be automatically linked to the flight, by time and date, and class of ticket – making it incredibly easy for managers to flag up unnecessary expenditure.

Likewise with entertainment, most systems provide a note area, enabling an individual to list those people entertained, including client company name and individuals. An alternative approach is to offer a drop down list of clients from a database, ensuring that only relevant, proven contacts can be included. Either way, the organisation has a complete record of employee activity, enabling any possibly suspect trends in behaviour or activity, falling outside corporate guidelines, to be immediately flagged for review.


There is certainly a change in the air. If enforced, the promised commitment to zero tolerance on employee fraud, will take organisations into a new era of tight employee control and rigorous imposition of expenditure analysis and assessment. But given the massive cultural resistance across many business sectors, just how hard will companies push? Will organisations enforce the zero tolerance model – or simply hope for incremental cultural change? In the wake of such high profile employee fraud cases, is it really worth the risk of sitting back and hoping for the best?