How businesses can avoid the backlash the IOC received when dealing with fraudsters

The Olympics bolted right past us this summer paving the way for the next big event: the Paralympics. And what remains high on the news agenda is the inquest into a state-led Russian doping scandal and the decision to apply one rule to some able-bodied athletes in the Olympics and a total ban for Paralympic athletes

Initially raised by German broadcasters ARD, the scandal has been bubbling in the background since 2014; however the fallout ultimately led to chaos for Russia’s Olympic and Paralympic hopes. The sanctions that Russia faces raise a lot of questions: How can the US enter previously-banned athletes, but Russia cannot? And why can the entire Russian track & field team be banned from competing, while athletes from judo to handball can compete to win gold? Even more damningly, Russia is unable to perform at all at the upcoming Paralympic Games. Would a blanket ban on all Russian athletes have been fairer? 

Essentially, Russia tried to gain a leg up on the competition in their quest for gold medals, and parallels can be seen with those in the workplace that look to defraud the company by dishonestly padding out their expenses – the workplace equivalent of a fake blood test. Therefore, those in charge of expense management should have a fair and strict structure for dealing with false claims if they want to avoid the barrage of criticism facing the IOC and IPC.

So just how common is internal expense fraud? You’d be surprised; expense fraud in the workplace is a growing problem amongst businesses across the UK. And while it is not a new phenomenon, dodgy expenses are increasingly becoming a cultural norm – one which is seriously affecting bottom lines. From government to the private sector, high profile cases of this are commonplace. 

But dig deeper than the headlines, and recent figures from YouGov suggest that one in five employees believe it acceptable to exaggerate expense claims. Last month, this was something that Concur’s own research also corroborated.

So how can businesses tackle workplace fraud?

Thankfully, there is a myriad of technology that can help managers uncover fraudulent claims through analysis of big data. Similarly to the performance tracking vests worn by many professional athletes, software has the ability to monitor data and highlight patterns or anomalies to those in charge of monitoring it. It’s a case of when that suspicious personal best is seen, not if. 

However, it is important to note that as powerful as modern financial technology is, it is no substitute for an educated workforce and a manager’s human touch. Technology flags up the anomaly, but humans must still make the call on the data, and be sensitive to different workplace and international cultures around expenses. A combination of the two approaches will yield the best results.

Communicate clearly

In order to create a level and clear playing field that the IOC and IPC have failed in, all policies need to be communicated far and wide in a way that can be understood by all. It is important to note that a policy is not set in stone; it needs to be reviewed regularly to make sure that they cover all angles in a constantly evolving business environment.

The usage of on-the-go mobile apps, people accruing air miles and other factors need to be addressed so that they don’t have a negative effect on staff compliance. Fundamentally, communication can only be achieved by addressing three key areas: technology, your policy, and strong management to oversee and monitor this.

Make sure employees know the consequences

Of course, that policy needs to relay both how to stay compliant with expenses – and precisely what will happen if the rules are broken. This is where the IOC fell down with regards to Russia and where the majority of the criticism came from; people felt that the punishments were far too varied and seemingly random, stemming from both the IOC itself and the various individual sporting bodies involved too.

There needs to be absolute clarity about how your business will treat deliberate expense fraud – as gross misconduct and the corresponding sanctions you as a business has for this occurring. Too often a slap on the wrist is the only punishment meted out due to there being no clear precedent for when fraud occurs.

Although you may have had issues in the past, it is vital to learn from these past mistakes and make sure you are better equipped next time. As new ways to play the expenses system are always being sought out, these learnings can also be applied to the machine learning algorithms monitoring your data.

Innocent until backed up with evidence

The Russian scandal was eventually confirmed by the report from the World Anti-Doping Agency, highlighting how evidence is a vital part of uncovering fraud. You are essentially toothless if you can’t substantiate the claims you are making.

Technology is once again a key component of evidence gathering. Rather than just waving an odd looking claim around, by using software you will have access to timestamps, digital receipt copies, and a full audit flow of who, what, where and when. This audit flow can also be flagged directly to human resources – allowing the right people to step in when needed.

Expense fraud isn’t something which is going to disappear anytime soon – much like cheating within sports; people are always going to want to bypass the rules for an advantage. What you can do – in both fields – is to make sure you have the infrastructure in place to monitor effectively, that your staff and managers are educated in how best to operate, and that your communication channels are clear and regularly updated.

There're many ways that the IOC could have handed the Russian doping scam better – including the use of technology. Businesses should do the same and ensure they have a robust modern solution in place to effectively manage expenses.

Chris Baker, MD of UK Enterprise, Concur

Image Credit: Gustavo Frazao / Shutterstock