£1.3 Billion loss from dubious expenses claims

It has been reported that the UK lost a staggering £1.3 billion in 2010 due to fraudulent and excessive expenses The report comes from GlobalExpense, one of Europe’s leading expenses outsourcers. The £1.3 Billion loss consisted of £999m for claims that were outside of a company’s policy, and £324m for claims that were fraudulent.

It averaged out that 10% of claims were outside the policies of the respective company’s. This new Employee Expenses report for 2011 gained its information from over 11m expenses claims. These were made from 2006-2010 by over 308,000 employees based in the UK.

David Vine, CEO of GlobalExpense says, “Clearly bosses of UK businesses can be doing a lot more to control costs and save money within their organisations, particularly when it comes to scrutinising the company’s expense policy. The proportion of claims that are outside company policy, but are approved anyway, is still too high and fraudulent claims remain a problem. Businesses need to improve policy enforcement and should insist on getting receipts from their employees to support all claims.”

The report also revealed double standards are practiced by managers who have enforced tighter compliance rules on employees, but have increased their own out of policy spend in 2010. The average employee claimed £90 less in 2010, £1,698 over the year compared with £1,788 in 2009. At £4,200, the average manager claimed £18 more. Managers were also 30 percent more likely than employees to make claims that didn’t comply with company policy.

Questionable claims included:

• a payment of over £4,000 for prep school fees
• over £58,000 for client entertaining
• More than £26,000 for a final payment on a holiday to Las Vegas under ‘sundries’

Whilst other unusual expense claims in 2010 included:

• £1,200 for lap dancers at Stringfellows
• A porn film on a hotel invoice, for which the description of purchase given was ‘argument with the wife’
• One frugal employee even claimed 43p for using a public toilet
• The hire of a van – for which proof of purchase was a picture of the claimant in the van

According to the report, the average expense-claiming employee in the UK made 33 claims in 2010 (compared to 38 in 2009). Although the average expense claim in 2010 rose to £62.08 compared to £57.46 in 2009 (largely due to increases in cost of living, particularly food and travel costs), the average amount claimed over the year dropped from £2,181 in 2009 to £2,051 in 2010.

Other interesting findings from the report include:

• The maximum amount received for expenses over the year by any one employee was £333,000

• Employees in the financial services industry are the biggest expenses spenders on entertainment. The average expense claim value had dropped to £124.11 in 2009, but bounced back in 2010 to £143. This suggests that those working in financial services still have the cash to entertain clients and prospects, and win new business
• Business travel remains the largest expenses spend for businesses. However, this year employees travelled far less, with the average number of journeys dropping 15 percent from 23 in 2009 to 20 in 2010
• Entertainment spending is the only area to register an increase, up 10 percent suggesting that businesses are having to spend more to impress potential clients and beat competitors to the punch

Complimentary copies are available from: www.globalexpense.com/Benchmark_Report.app