17 ms·

Algorithmic auditors are exposing employee expense fraud

100 points by denzil_correa 8y ago

thrower123 8y ago
I don't think this is worthwhile. Most of the time employees are getting back their unpaid overtime and other unpaid work in their expense accounts.
- sigi45 8y ago
  What? Why? Wtf?
  - CaptainZapp 8y ago
    I'm also slightly surprised by the first two replies. Expenses should definitely not be a method to get back at your employer for perceived and real sleighs. Probably, if your employer steals from you this problem should be corrected at source and not via expense claims. For what it's worth: I think that (as a for example) an Amazon employee stands in the queue for half an hour, in order to get security checked, and is not paid for that that's wage theft. Plain and simple. No matter if the courts disagree. Nevertheless you shouldn't fib expenses (as if those folks could) to get back at your employer.
    - dmurray 8y ago
      The GP might be suggesting that it benefits both the employer and the employee here. The employee gets a better tax treatment and the employer can have a permissive approach to expenses when it might be politically difficult to officially give a raise.
      - CaptainZapp 8y ago
        Ah, OK. Thanks. For what it's worth: I didn't downvote. Nevertheless there seems to be an attitude in certain circles that expenses ar a form of free for all. My assumption is that you have a relationship with your employer, which pays you for work provided. If something stinks in that relationship then it's the stink, which should be removed. I'm aware that this is an idealized view. Especially in the US where courts seem to be overly employer friendly, or, even worse, where employees are completely shafted by mandatory arbitration clauses.
        candiodari 8y ago
        You are assuming the employer - at least the first level manager, but more likely all the way up - isn't aware of this, and approves. Allowing expenses as pay is very common, widely practiced and normal. From buying books to hotel room stays to letting family travel along for long trips (and providing entertainment for them). Seems to happen all the time. Hell, isn't the white house an example of it ? (I would also like to point out that buying meat for a snake might simply be a mistake. I certainly would have tried feeding a python something dead first, wtf)
      - detaro 8y ago
        Although an official policy of being permissive with what expenses are covered seems like it'd be better than "we look away when you lie on your expenses claim". Legal safety for the employee, more fairness among employees. E.g. the first example in the article of someone having the company pay for dog care during business travel seems something that'd be fairly easy to justify as a policy.
- jandrese 8y ago
  In my company any time spent traveling is on the clock. You don't charge for time in the hotel room, but time at the airport/in a plane/in the taxi all counts. The expenses people will cross reference your timecard to make sure you did it right too. It's kind of annoying actually, because it means feeling guilty if you aren't working while on the plane, but at the same time I can't work because the seats are too close together and the guy ahead of me has reclined all the way so I can't even open my laptop.
- blue_pancake 8y ago
  Most employees are getting robbed by their employers, but those tend to be the ones who don't have expense accounts. If you have a true expense account, you're likely on the robbing side, not the robbed.
CaptainZapp 8y ago
I never really got it why people cheat on expenses. Apart from the fact that theft (at least in this case) is morally repugnant it's a sure fire way to get fired if your employer needs any reason at all. Expenses, as implied in the name, are meant to reimburse employees for expenses fronted for their employers. It's not an enrichment scheme to pad your salary or to lay off unrelated expenses on your employer. Bonus for those geniuses, which expense strip club visits. This seems the expense equivalent of surfing porn at work; stupid!
- dpwm 8y ago
  It depends on the environment and the employee. In the cases I personally know of, there was at least an element of the employee believing they had been cheated out of something: perks being removed, legitimate expenses being denied for seemingly arbitrary reasons.
  - CaptainZapp 8y ago
    perks being removed, legitimate expenses being denied for seemingly arbitrary reasons I think that's fundamentally wrong and should - at least in an ideal world - never happen. I just don't think that fibbing expenses is a good way to get back at your employer. I'm aware that this reply has a certain whiff of Euro centrism, where such things are less likely to happen and workers really have better recourse to get back at their employers. Shit like mandatory arbitration agreements would be laughed out of court herearound.
    - dpwm 8y ago
      > I think that's fundamentally wrong and should - at least in an ideal world - never happen. Agreed. But it does. Some of the perks removed were never perks but a form of negligence. Some of the expenses being denied for seemingly arbitrary reasons were denied because there is no way they can be justified as business expenses, but somebody in the past authorized them. > I just don't think that fibbing expenses is a good way to get back at your employer. We're in agreement on that. Just like theft from employer, it can only realistically have one outcome regarding employment once discovered -- no matter how small. > I'm aware that this reply has a certain whiff of Euro centrism, where such things are less likely to happen and workers really have better recourse to get back at their employers. My experiences relate to the UK -- albeit during the period where the recourse to get back at employers required paying for an employment tribunal to hear your case. Even after that was reversed, most disgruntled employees don't go to employment tribunals. > Shit like mandatory arbitration agreements would be laughed out of court herearound. Agreed. But you don't need those for injustices to be felt. Most employees don't really consider that expenses have to be a justifiable expense by the employer for tax purposes and that the people authorizing them are possibly over-worked and only distrust few people enough to check every item.
ghaff 8y ago
>According to Oversight, 30 percent of employee expense claims are risky, wasteful and potentially fraudulent. Seriously? 30 percent? That seems quite unbelievable unless you're defining your terms to include reimbursements that are within most normal travel policies. EDITED e.g. employees book their preferred airlines, hotel chains, etc. even if they're not the absolute cheapest.
- cascom 8y ago
  100% - I can’t recall working anywhere where the expense policy was that well defined, usually it was “keep it reasonable” or “don’t raise eyebrows” (obviously not including fraud) Additionally, in corporate America there used to be somewhat of an understood agreement that when traveling for work (and being away from your family, not getting paid for a 24hr day, etc) that that burden would be partially be made up for by nice hotels, meals, etc.
  - ghaff 8y ago
    It varies by company and department but, yeah, that's been pretty much the norm everywhere I've worked. There do tend to be specific policies related to class of airfare as it's a major part of travel expense and the difference between economy and business can easily be 5x. ADDED: Class of airfare is a tough one because the delta $$ are so much most of the time. Business class travel does become something of a perk for people above a certain level. It's true those people do tend to travel more and are more tightly scheduled but it's a loose correlation. But for hotels and meals, it's always been pretty much common sense for me. No one expects me to stay in Fleabag Motel but eyebrows would doubtless be raised if I made a habit of staying at a $1,000 per night high-end hotel unless there were special circumstances such as an event at an isolated location. (Or it was in Silicon Valley--saw a Marriott Courtyard going for $1100/night the other week :-))
    - CaptainZapp 8y ago
      Business class travel does become something of a perk for people above a certain level The companies I worked for it was usually depending on the travel time. Currently we get to fly in business for flights > 3 hours (which I think is generous). Managing directors probably get to fly first class on such flights, though
bsenftner 8y ago
As remote employment grows, I sense a larger and larger amount of office business expenses being invisibly pushed to the remote employees, while the business saves on the expense of less or no office space. The entire area of "expenses" is ripe for an inspection revolution and formalization on all sides.
- ghaff 8y ago
  Many companies do have policies with respect to certain home office expenses. But what's "fair" with respect to expenses generally is a bit tricky. Yes, there are home office expenses--maybe trivial, maybe a lot if you need to set up a room for the purpose. On the other hand, you're reducing or eliminating perhaps substantial commuting expenses. Even with respect to travel, there are some perks with meals, etc. On the other hand, if you travel a lot you probably have to pay for various home services that you might otherwise not have to.
  - op00to 8y ago
    I've audited my home office expenses as a remote worker, and I save way more money by not commuting and not having to take time off for minor illnesses. It turns out that the actual cost of my home office space (dedicated room % of montage) is really not enough for me to even calculate and deduct. At least in my case, I come out ahead.
    - ghaff 8y ago
      I'm sure that's the usual case. I have a room that's specifically an office but even that isn't dedicated for work in any normal meaning of the word. I do know someone who had a small standalone office built on their property but that's pretty unusual. Most people I know who really want a space specific for work will go to a co-working facility (which I believe my company pays for in at least some cases).
    - Retric 8y ago
      Depends on where the home office is and what you do. It’s not hard to break 1,000$ a month including a modest space inside an apartment in an expensive city. People that are 100% remote often live in cheap areas, but that’s not always the case.
anonymousDan 8y ago
How about better expense claiming software so employers aren't stealing from employees through unclaimed expenses!
- chasingthewind 8y ago
  I have done a tiny amount of business travel in my career but recently went to a conference in a far off land and had to wrestle with the expensing system. First, I was required to loan my employer $3000 for a month by paying for all the expenses (including the unavoidable very expensive hotel rate) on my personal card. Afterwards I had to fight with the expensing system for several hours to get everything lined up correctly so that I could have the privilege of having my own money returned. I was scrupulously honest with my expenses and still felt like I was being eyed suspiciously by the system. I never once considered misrepresenting my expenses but I definitely considered pounding my keyboard. :)
  - ghaff 8y ago
    I frequently say that the only thing I hate more than doing my expenses is not having my money. :-) (I travel a lot so the amounts add up quickly.)
    - Someone1234 8y ago
      I know I'm hopelessly naive but I'm surprised there isn't An App for that™ Instead of filing expenses when you get back home/a month later, you whip out the app while still travelling, take a picture of the receipts/invoice, and then filling in a short form. The app posts the item to the trip (along with photographic evidence) and that's one less thing to do upon your return.
      - jakobegger 8y ago
        That would be very convenient for the employee, but it's probably more profitable to sell management on an AI based machine learning automatic fraud detection system that practically pays for itself!!!
XCabbage 8y ago
These people seem to have a strange definition of "fraud". In the first two paragraphs, they list three apparent "frauds" and then note that they were detected by analysing the receipts that the employees submitted. In other words, the employees freely disclosed what they were expensing, by the article's own admission. There's no explanation given of why the three expenses listed were illegitimate in any way; it seems reasonable to charge for the cost of having a kennel take care of your dog while you travel, and I assume the yoga and strip club were client entertainment for sales or marketing purposes. You can very reasonably disapprove of taking clients to strip clubs, of course, but doing so and then openly disclosing it isn't dishonest. The only example of employees committing fraud - that is, gaining a personal economic benefit through dishonesty - is in the final three paragraphs. In that case, somebody billed steak as food for the office python when really they were taking it home to barbecue for their family. The rest of this article is deranged; these auditors, at least as they are portrayed by Bloomberg, seem to think that submitting an expense claim that they don't approve of, entirely honestly, is somehow magically "fraud". What the hell?
- tpxl 8y ago
  >You can very reasonably disapprove of taking clients to strip clubs, of course, but doing so and then openly disclosing it isn't dishonest. Doing so and then submitting the expense as a steakhouse is dishonest at the _minimum_.
  - XCabbage 8y ago
    If I go to a steakhouse and then a strip club, submitting all the receipts for the night under the heading of "steakhouse business dinner" seems basically honest. I'm assuming that's what happened, just because in my imagination a typical night out at a strip club starts somewhere else first. Maybe the version of events in my mind doesn't match reality, but the article doesn't explain either way. If you disagree, would you also consider it dishonest to submit receipts for the client's transport to and from the steakhouse under the same heading? Or drinks in a bar afterwards? If not, why not?
    - 8y ago
jasode 8y ago
I found out about a worker getting fired because of this at one of the big 4 consulting firms. They used SAP Concur[0] software for travel & expense management and the machine learning algorithm flagged an irregularity in a recent expense reimbursement. But she wasn't actually fired for that one bad expense. What happened was that the SAP Concur raised management's suspicions which prompted the human accountants to go back into the old archives of T&E submissions from 5 years ago before SAP Concur was installed. They manually looked at her past reimbursements and discovered a long history of fraudulent claims. (E.g. incorrect hotel amounts.) After the investigation, she was promptly fired without severance and also lost her flexible medical benefits (worth at least $10k). Fraudulent expenses are no joke. Consulting companies are very sensitive about it because many consultants' expenses are included in the invoices and directly passed onto the clients. If you let clients discover a fraudulent expense instead of your internal auditing team finding it first, it is extremely embarrassing and taints all your other invoices. Integrity has to be maintained and you don't want clients questioning all the other billable hours and expenses. [0] https://www.concur.com/ https://www.concur.com/
- _Codemonkeyism 8y ago
  A lot of expense procedures are fuzzy for a reason (no experiences with consulting companies). Fraudulent expenses are the first and easiest way on the manager level / c-level to check if you want to get rid of someone. If everything is ok you need to look somewhere else.
- davio 8y ago
  There was the old "raincoat expense report" urban legend back when I was in Big 4. Consultant left raincoat on subway while traveling for business and ran replacement cost through on expense report. Admin rejected the expense. Consultant submitted second expense report with exact same total without the raincoat expense line item and the cost just absorbed into the other untraceable per diem and incidental categories. "Find the raincoat now" as a comment.
  - Waterluvian 8y ago
    Interesting story. :) I think businesses can he really hard on fraud without being hard on what constitutes a valid expense.
CPLX 8y ago
What are the chances that they actually have effective AI doing this? I have a very strong suspicion, admittedly based on nothing at all, that they just have some simple rules based algorithms and mostly just hire cheap labor to look over expense reports.
- jakobegger 8y ago
  if (expense_for_flight > 2 * average_expense_for_flight) { flag_for_review() }
  - gnulinux 8y ago
    "AI"
- jacobush 8y ago
  A.I. = Almost Intelligent
rozim 8y ago
I hope it uses Benford's law as a signal.
mv4 8y ago
this quote: “The python was a legitimate business purchase,” van Drunen says. “But the steak was for his family barbecues.”
- crooked-v 8y ago
  If the boss is reasonably convinced that having a python in the office will entertain or impress clients when they come in, well, there's your python.
jiveturkey 8y ago
omg the autism level of these responses. y’all are acting like expenses are “rules” that shall not be violated for simple fear of being outside the rules. whereas in reality, it’s like speed limits. also, you don’t “owe” your company a duty to have a pristine expense report. if that were true, don’t (eg) steal from your employer by browsing HN and whatever else during work hours. (please don’t create a false dichotomy that i am advocating lying and falsification) lastly, in finance, strip clubs are almost de rigeur. sure it’s salacious fodder for the article but it’s almost expected. and with modern sensibilities you have to hide it from the bean counters. that’s all
- supahfly_remix 8y ago
  > lastly, in finance, strip clubs are almost de rigeur. even in the post #metoo era? HR would definitely be concerned with this, as well as the bean counters.
  - aboutthecpp 8y ago
    The "solution" to living in the post #metoo era is to exclude women from the workplace altogether. This is an unfortunate but entirely predictable unintended consequence of #metoo, and it's showing up in tech too. https://www.bloomberg.com/news/articles/2018-12-03/a-wall-street-rule-for-the-metoo-era-avoid-women-at-all-cost https://www.bloomberg.com/news/articles/2018-12-03/a-wall-st... https://business.financialpost.com/news/fp-street/wall-street-rule-for-the-metoo-era-avoid-women-at-all-cost https://business.financialpost.com/news/fp-street/wall-stree...
- JumpCrisscross 8y ago
  > in finance, strip clubs are almost de rigeur Worked in finance almost my entire career, from trading floors to investment banking to fund management. Never seen this.
  - jiveturkey 8y ago
    as someone with a large expense account? ie, outside sales or client relationships?
halite 8y ago
> While the snake could be justified, the employee’s purchase of $1,200 worth of steak as snake food could not. Pythons only consume live prey. How would AI solve / detect this anomaly? I am curious.
- jpatokal 8y ago
  Most expense reports don't involve buying $1200 of groceries.
mrlucax 8y ago
There is a similar project here in Brazil [1]. They analyse public records of government officials and detects discrepancies with their refound requests for their "official" expenses. It's a civil society totally open project. [1] https://github.com/okfn-brasil/serenata-de-amor https://github.com/okfn-brasil/serenata-de-amor
dcosson 8y ago
Does anyone else feel like the entire system of expensing is kind of bizarre? This is kind of a tangent, but I feel like a few examples of expense fraud are less interesting than the fact that we're all using this deeply ingrained system that incentivizes cheating. I'm thinking just about travel expenses here, obviously taking out clients is somewhat different. But most companies will have a per diem for travel but you still have to itemize every cost within that range. It's a pain for employees, and they are forced to lend the company sometimes thousands of dollars for a month or two at 0% interest. I think you could also argue that it's a pretty regressive cost as I'd imagine it could be hard in some cases for lower-income employees or people with extenuating circumstances to front the cost of their work travel before getting reimbursed. There's also the constant effort of deciding what should and should not qualify as a valid expense, which isn't always black and white. Why not just pay the per diem in cash? Even aside from any actual fraud, I'm sure everyone has seen a lot of wastefulness when it comes to work travel, like going to relatively fancy restaurants every night or ordering extra rounds of drinks because you can expense it. Why should it matter to the company whether I'm doing that stuff or eating cheaply and pocketing the money? Why should it matter to the government for tax purposes whether I'm doing one or the other? I have no idea what a different system would look like, since this is a pretty fundamental part of how individuals and businesses are taxed. But it seems like there should be a better way.
- Raidion 8y ago
  I think one big difference would be taxes. A per diem over expenses would be considered compensation, and would involve both income and payroll taxes. Otherwise, I'd work for free, have the company give me a per diem of X a day and just not pay taxes on it and the company wouldn't pay payroll taxes either! The government is strongly incentivized to make sure that employers can't give employees untaxed money.
  - ghaff 8y ago
    I don't think that's necessarily true. The per diem would presumably need to be reasonable, e.g. based on the (low) government per diem for the location. I know in my case, most expenses are itemized but you can expense a small fixed daily amount if you stay with friends. (I assume the thinking is that you buy some groceries, a bottle of wine, etc. when you stay with people that you can't really expense.)
bediger4000 8y ago
How expensive (to a corporation) are the low-level-employee expenses, fraudulent or not? I mean, nobody likes to waste money on fraud or strip clubs or extra steaks, but is the cost of AI Oversight more than you'd retrieve? How about expenses for directors/VP/Executive VP/CxO? Does this AI look over their expense reports, too? I would guess that even legit expenses from that level look a bit odd, but having AI audit employee expenses but not management expenses could contribute to a morale problem. Another place that this AI oversight could help society as a whole is having corporations/companies get audited for wage theft. Wage theft is supposedly the largest dollar amount of theft in the US, and it probably exists because audits are so seldom done. AI wage theft audits could have a large beneficial effect for employees.
- motohagiography 8y ago
  To answer the question about the value of "AI," it is a black box of pretexts you can use for leverage. Expenses policies are usually grey enough that if you want someone out of the company without significant severance, using the expenses policy as a pretext imposes costs on the target they probably won't fight. If a company wants to keep someone, there is no end to the excesses they will tolerate barring any liabilities greater than the value they bring. If they want to get rid of someone, the mechanism and the true reason are usually very different. Useful rule is to treat any company expense as a vulnerability that will be used against you in a severance negotiation. Arguably, a more accurate Turing test would be one where instead of being indifferent as to whether we are communicating with a human or machine - we decide that a machine is sufficiently intelligent if it can provide us with pretexts for political leverage against other people.
  - ghaff 8y ago
    The example that was so hilariously ludicrous that you had to have real admiration for the PR people keeping a straight face was when Mark Hurd was forced out at HP because he supposedly expensed a business dinner that wasn't actually a business dinner. (Which turned out to have almost certainly been about more than a dinner but nonetheless doubtless a trivial sum of money in the scheme of things.)
deckar01 8y ago
My mom got flagged by a system like this a few years ago. The state was in a financial bind, so they hired an algorithmic auditing firm to claw back public funds from medical professionals who billed Medicare/Medicaid. They had been lax about the documentation they accepted so, they were able to claim just about anyone was missing years worth of legally required documents. She did in-home medical evaluations for rural communities and worked long hours. The amount of hours and miles she billed set off red flags, so they sent her a bill for tens of thousands of dollars and threatened her with criminal prosecution. It took her months and who knows how much in legal costs to fight it.
ChuckMcM 8y ago
This is one of those areas that I never "got" in that I just filed expense reports for what I spent and didn't see the advantage of getting an extra $10 or $100 from the trip. And I knew people who loved to push it as far to the limit as they could, like a manager who had a private table at a Sunnyvale restaurant and filed a huge reimbursement request for 'team lunches' and a baggie full of receipts. Betting that nobody would actually go and verify the receipts. So at some point you have to be in a somewhat adversarial relationship with the company right? I suppose if you felt the company was taking advantage of you this would make sense as a way to 'get back', but wouldn't you rather be working somewhere else instead?
- x0x0 8y ago
  The only time I've done anything like this is when the company did their best -- using Concur -- to avoid paying legitimate expenses. ie we got into an argument over whether my taxi ride home from SFO was "too expensive". I was like, um, I got in the fucking taxi, told it my address, and paid the bill. My employer used Concur and stupid rules to argue me into giving up and just paying the taxi ride out-of-pocket. I'm pretty sure that was the point, and many of the stupid expense "fraud" companies would notch that as a win. But I made my $57 back elsewhere, don't worry. And yeah, the fix was get an employer that wasn't ass.
  - Klathmon 8y ago
    Similar story here. I work remotely, and my previous employer wanted me to come up to the office for a few days as we did every now and then. But I didn't really want to go this time, I had other obligations, but ended up going anyway. Expense report time comes around, and they complain that I don't have the receipt from the rental car company that includes the gas refill information, so they aren't paying that, and they pushed back on the $7-per-day economy parking I had my car in for the week. So I looked over the handbook and some stuff in Concur, saw that I was entitled to like $10 for a breakfast each morning, and like $20 for dinner each night without a receipt. So I added a couple of those in there, it all added up, and they happily paid it... And while that alone wasn't a major reason I left the company, stupid penny-pinching stuff like it was a big part of it.
jpatokal 8y ago
I've used Concur as both a user and expense report approver, and I suspect these "AI" claims are overblown. What actually happens is that Concur can import transactions directly from a corp credit card and identify a lot of them (airlines, hotels, restaurants) automatically. From what I've been told, the auditing bit consists of looking for anomalously high charges in categories ($1000 flight OK, $1000 restaurant bill not so much) and checking against a blacklist of banned establishments (gambling, adult entertainment, etc).
number_six 8y ago
I just got a job with a corporate card, and we have SAP Concur, I assume that everything will be scrutinized by some kind of AI - as it automatically reads the receipts and essentially tells me that it is doing so. One steak dinner is not worth my job...
blue_pancake 8y ago
This is unnerving. I don't really have an issue with people who commit fraud being caught in the act. It still bothers me that we're closing out the 2010s and most of what we've achieved as an industry is make it easier for employers to surveil their people. The story of the 20th century included a moon landing and ubiquitous personal computers. The 21st century's story seems to be about advertisers, health insurers, and employers using technology to get every edge on the common people that they can get.
- mc32 8y ago
  Being able to find reference material, how-tos, self-paced, self-led education seems like a really good thing we’ve achieved as asiciety. Obvs this carries over from the last years of prev century, but it’s now uniquitous.
- tomatotomato37 8y ago
  That was the story of the late 20th century. The story of the early 20th century was industrialized warfare killing 37 million people because a prince got shot.
deleted 8y ago
[deleted]

100 points by denzil_correa 8y ago

I don't think this is worthwhile. Most of the time employees are getting back their unpaid overtime and other unpaid work in their expense accounts.

sigi45 8y ago
What? Why? Wtf?
- CaptainZapp 8y ago
  I'm also slightly surprised by the first two replies. Expenses should definitely not be a method to get back at your employer for perceived and real sleighs. Probably, if your employer steals from you this problem should be corrected at source and not via expense claims. For what it's worth: I think that (as a for example) an Amazon employee stands in the queue for half an hour, in order to get security checked, and is not paid for that that's wage theft. Plain and simple. No matter if the courts disagree. Nevertheless you shouldn't fib expenses (as if those folks could) to get back at your employer.
  - dmurray 8y ago
    The GP might be suggesting that it benefits both the employer and the employee here. The employee gets a better tax treatment and the employer can have a permissive approach to expenses when it might be politically difficult to officially give a raise.
    - CaptainZapp 8y ago
      Ah, OK. Thanks. For what it's worth: I didn't downvote. Nevertheless there seems to be an attitude in certain circles that expenses ar a form of free for all. My assumption is that you have a relationship with your employer, which pays you for work provided. If something stinks in that relationship then it's the stink, which should be removed. I'm aware that this is an idealized view. Especially in the US where courts seem to be overly employer friendly, or, even worse, where employees are completely shafted by mandatory arbitration clauses.
      - candiodari 8y ago
        You are assuming the employer - at least the first level manager, but more likely all the way up - isn't aware of this, and approves. Allowing expenses as pay is very common, widely practiced and normal. From buying books to hotel room stays to letting family travel along for long trips (and providing entertainment for them). Seems to happen all the time. Hell, isn't the white house an example of it ? (I would also like to point out that buying meat for a snake might simply be a mistake. I certainly would have tried feeding a python something dead first, wtf)
    - detaro 8y ago
      Although an official policy of being permissive with what expenses are covered seems like it'd be better than "we look away when you lie on your expenses claim". Legal safety for the employee, more fairness among employees. E.g. the first example in the article of someone having the company pay for dog care during business travel seems something that'd be fairly easy to justify as a policy.
jandrese 8y ago
In my company any time spent traveling is on the clock. You don't charge for time in the hotel room, but time at the airport/in a plane/in the taxi all counts. The expenses people will cross reference your timecard to make sure you did it right too. It's kind of annoying actually, because it means feeling guilty if you aren't working while on the plane, but at the same time I can't work because the seats are too close together and the guy ahead of me has reclined all the way so I can't even open my laptop.
blue_pancake 8y ago
Most employees are getting robbed by their employers, but those tend to be the ones who don't have expense accounts. If you have a true expense account, you're likely on the robbing side, not the robbed.

CaptainZapp 8y ago

I never really got it why people cheat on expenses. Apart from the fact that theft (at least in this case) is morally repugnant it's a sure fire way to get fired if your employer needs any reason at all. Expenses, as implied in the name, are meant to reimburse employees for expenses fronted for their employers. It's not an enrichment scheme to pad your salary or to lay off unrelated expenses on your employer. Bonus for those geniuses, which expense strip club visits. This seems the expense equivalent of surfing porn at work; stupid!

dpwm 8y ago
It depends on the environment and the employee. In the cases I personally know of, there was at least an element of the employee believing they had been cheated out of something: perks being removed, legitimate expenses being denied for seemingly arbitrary reasons.
- CaptainZapp 8y ago
  perks being removed, legitimate expenses being denied for seemingly arbitrary reasons I think that's fundamentally wrong and should - at least in an ideal world - never happen. I just don't think that fibbing expenses is a good way to get back at your employer. I'm aware that this reply has a certain whiff of Euro centrism, where such things are less likely to happen and workers really have better recourse to get back at their employers. Shit like mandatory arbitration agreements would be laughed out of court herearound.
  - dpwm 8y ago
    > I think that's fundamentally wrong and should - at least in an ideal world - never happen. Agreed. But it does. Some of the perks removed were never perks but a form of negligence. Some of the expenses being denied for seemingly arbitrary reasons were denied because there is no way they can be justified as business expenses, but somebody in the past authorized them. > I just don't think that fibbing expenses is a good way to get back at your employer. We're in agreement on that. Just like theft from employer, it can only realistically have one outcome regarding employment once discovered -- no matter how small. > I'm aware that this reply has a certain whiff of Euro centrism, where such things are less likely to happen and workers really have better recourse to get back at their employers. My experiences relate to the UK -- albeit during the period where the recourse to get back at employers required paying for an employment tribunal to hear your case. Even after that was reversed, most disgruntled employees don't go to employment tribunals. > Shit like mandatory arbitration agreements would be laughed out of court herearound. Agreed. But you don't need those for injustices to be felt. Most employees don't really consider that expenses have to be a justifiable expense by the employer for tax purposes and that the people authorizing them are possibly over-worked and only distrust few people enough to check every item.

ghaff 8y ago

>According to Oversight, 30 percent of employee expense claims are risky, wasteful and potentially fraudulent. Seriously? 30 percent? That seems quite unbelievable unless you're defining your terms to include reimbursements that are within most normal travel policies. EDITED e.g. employees book their preferred airlines, hotel chains, etc. even if they're not the absolute cheapest.

cascom 8y ago
100% - I can’t recall working anywhere where the expense policy was that well defined, usually it was “keep it reasonable” or “don’t raise eyebrows” (obviously not including fraud) Additionally, in corporate America there used to be somewhat of an understood agreement that when traveling for work (and being away from your family, not getting paid for a 24hr day, etc) that that burden would be partially be made up for by nice hotels, meals, etc.
- ghaff 8y ago
  It varies by company and department but, yeah, that's been pretty much the norm everywhere I've worked. There do tend to be specific policies related to class of airfare as it's a major part of travel expense and the difference between economy and business can easily be 5x. ADDED: Class of airfare is a tough one because the delta $$ are so much most of the time. Business class travel does become something of a perk for people above a certain level. It's true those people do tend to travel more and are more tightly scheduled but it's a loose correlation. But for hotels and meals, it's always been pretty much common sense for me. No one expects me to stay in Fleabag Motel but eyebrows would doubtless be raised if I made a habit of staying at a $1,000 per night high-end hotel unless there were special circumstances such as an event at an isolated location. (Or it was in Silicon Valley--saw a Marriott Courtyard going for $1100/night the other week :-))
  - CaptainZapp 8y ago
    Business class travel does become something of a perk for people above a certain level The companies I worked for it was usually depending on the travel time. Currently we get to fly in business for flights > 3 hours (which I think is generous). Managing directors probably get to fly first class on such flights, though

bsenftner 8y ago

As remote employment grows, I sense a larger and larger amount of office business expenses being invisibly pushed to the remote employees, while the business saves on the expense of less or no office space. The entire area of "expenses" is ripe for an inspection revolution and formalization on all sides.

ghaff 8y ago
Many companies do have policies with respect to certain home office expenses. But what's "fair" with respect to expenses generally is a bit tricky. Yes, there are home office expenses--maybe trivial, maybe a lot if you need to set up a room for the purpose. On the other hand, you're reducing or eliminating perhaps substantial commuting expenses. Even with respect to travel, there are some perks with meals, etc. On the other hand, if you travel a lot you probably have to pay for various home services that you might otherwise not have to.
- op00to 8y ago
  I've audited my home office expenses as a remote worker, and I save way more money by not commuting and not having to take time off for minor illnesses. It turns out that the actual cost of my home office space (dedicated room % of montage) is really not enough for me to even calculate and deduct. At least in my case, I come out ahead.
  - ghaff 8y ago
    I'm sure that's the usual case. I have a room that's specifically an office but even that isn't dedicated for work in any normal meaning of the word. I do know someone who had a small standalone office built on their property but that's pretty unusual. Most people I know who really want a space specific for work will go to a co-working facility (which I believe my company pays for in at least some cases).
  - Retric 8y ago
    Depends on where the home office is and what you do. It’s not hard to break 1,000$ a month including a modest space inside an apartment in an expensive city. People that are 100% remote often live in cheap areas, but that’s not always the case.

anonymousDan 8y ago

How about better expense claiming software so employers aren't stealing from employees through unclaimed expenses!

chasingthewind 8y ago
I have done a tiny amount of business travel in my career but recently went to a conference in a far off land and had to wrestle with the expensing system. First, I was required to loan my employer $3000 for a month by paying for all the expenses (including the unavoidable very expensive hotel rate) on my personal card. Afterwards I had to fight with the expensing system for several hours to get everything lined up correctly so that I could have the privilege of having my own money returned. I was scrupulously honest with my expenses and still felt like I was being eyed suspiciously by the system. I never once considered misrepresenting my expenses but I definitely considered pounding my keyboard. :)
- ghaff 8y ago
  I frequently say that the only thing I hate more than doing my expenses is not having my money. :-) (I travel a lot so the amounts add up quickly.)
  - Someone1234 8y ago
    I know I'm hopelessly naive but I'm surprised there isn't An App for that™ Instead of filing expenses when you get back home/a month later, you whip out the app while still travelling, take a picture of the receipts/invoice, and then filling in a short form. The app posts the item to the trip (along with photographic evidence) and that's one less thing to do upon your return.
    - jakobegger 8y ago
      That would be very convenient for the employee, but it's probably more profitable to sell management on an AI based machine learning automatic fraud detection system that practically pays for itself!!!

XCabbage 8y ago

These people seem to have a strange definition of "fraud". In the first two paragraphs, they list three apparent "frauds" and then note that they were detected by analysing the receipts that the employees submitted. In other words, the employees freely disclosed what they were expensing, by the article's own admission. There's no explanation given of why the three expenses listed were illegitimate in any way; it seems reasonable to charge for the cost of having a kennel take care of your dog while you travel, and I assume the yoga and strip club were client entertainment for sales or marketing purposes. You can very reasonably disapprove of taking clients to strip clubs, of course, but doing so and then openly disclosing it isn't dishonest. The only example of employees committing fraud - that is, gaining a personal economic benefit through dishonesty - is in the final three paragraphs. In that case, somebody billed steak as food for the office python when really they were taking it home to barbecue for their family. The rest of this article is deranged; these auditors, at least as they are portrayed by Bloomberg, seem to think that submitting an expense claim that they don't approve of, entirely honestly, is somehow magically "fraud". What the hell?

tpxl 8y ago
>You can very reasonably disapprove of taking clients to strip clubs, of course, but doing so and then openly disclosing it isn't dishonest. Doing so and then submitting the expense as a steakhouse is dishonest at the _minimum_.
- XCabbage 8y ago
  If I go to a steakhouse and then a strip club, submitting all the receipts for the night under the heading of "steakhouse business dinner" seems basically honest. I'm assuming that's what happened, just because in my imagination a typical night out at a strip club starts somewhere else first. Maybe the version of events in my mind doesn't match reality, but the article doesn't explain either way. If you disagree, would you also consider it dishonest to submit receipts for the client's transport to and from the steakhouse under the same heading? Or drinks in a bar afterwards? If not, why not?
  - 8y ago

jasode 8y ago

I found out about a worker getting fired because of this at one of the big 4 consulting firms. They used SAP Concur[0] software for travel & expense management and the machine learning algorithm flagged an irregularity in a recent expense reimbursement. But she wasn't actually fired for that one bad expense. What happened was that the SAP Concur raised management's suspicions which prompted the human accountants to go back into the old archives of T&E submissions from 5 years ago before SAP Concur was installed. They manually looked at her past reimbursements and discovered a long history of fraudulent claims. (E.g. incorrect hotel amounts.) After the investigation, she was promptly fired without severance and also lost her flexible medical benefits (worth at least $10k). Fraudulent expenses are no joke. Consulting companies are very sensitive about it because many consultants' expenses are included in the invoices and directly passed onto the clients. If you let clients discover a fraudulent expense instead of your internal auditing team finding it first, it is extremely embarrassing and taints all your other invoices. Integrity has to be maintained and you don't want clients questioning all the other billable hours and expenses. [0] https://www.concur.com/ https://www.concur.com/

_Codemonkeyism 8y ago
A lot of expense procedures are fuzzy for a reason (no experiences with consulting companies). Fraudulent expenses are the first and easiest way on the manager level / c-level to check if you want to get rid of someone. If everything is ok you need to look somewhere else.
davio 8y ago
There was the old "raincoat expense report" urban legend back when I was in Big 4. Consultant left raincoat on subway while traveling for business and ran replacement cost through on expense report. Admin rejected the expense. Consultant submitted second expense report with exact same total without the raincoat expense line item and the cost just absorbed into the other untraceable per diem and incidental categories. "Find the raincoat now" as a comment.
- Waterluvian 8y ago
  Interesting story. :) I think businesses can he really hard on fraud without being hard on what constitutes a valid expense.

CPLX 8y ago

What are the chances that they actually have effective AI doing this? I have a very strong suspicion, admittedly based on nothing at all, that they just have some simple rules based algorithms and mostly just hire cheap labor to look over expense reports.

jakobegger 8y ago
if (expense_for_flight > 2 * average_expense_for_flight) { flag_for_review() }
- gnulinux 8y ago
  "AI"
jacobush 8y ago
A.I. = Almost Intelligent

rozim 8y ago

I hope it uses Benford's law as a signal.

mv4 8y ago

this quote: “The python was a legitimate business purchase,” van Drunen says. “But the steak was for his family barbecues.”

crooked-v 8y ago
If the boss is reasonably convinced that having a python in the office will entertain or impress clients when they come in, well, there's your python.

jiveturkey 8y ago

omg the autism level of these responses. y’all are acting like expenses are “rules” that shall not be violated for simple fear of being outside the rules. whereas in reality, it’s like speed limits. also, you don’t “owe” your company a duty to have a pristine expense report. if that were true, don’t (eg) steal from your employer by browsing HN and whatever else during work hours. (please don’t create a false dichotomy that i am advocating lying and falsification) lastly, in finance, strip clubs are almost de rigeur. sure it’s salacious fodder for the article but it’s almost expected. and with modern sensibilities you have to hide it from the bean counters. that’s all

supahfly_remix 8y ago
> lastly, in finance, strip clubs are almost de rigeur. even in the post #metoo era? HR would definitely be concerned with this, as well as the bean counters.
- aboutthecpp 8y ago
  The "solution" to living in the post #metoo era is to exclude women from the workplace altogether. This is an unfortunate but entirely predictable unintended consequence of #metoo, and it's showing up in tech too. https://www.bloomberg.com/news/articles/2018-12-03/a-wall-street-rule-for-the-metoo-era-avoid-women-at-all-cost https://www.bloomberg.com/news/articles/2018-12-03/a-wall-st... https://business.financialpost.com/news/fp-street/wall-street-rule-for-the-metoo-era-avoid-women-at-all-cost https://business.financialpost.com/news/fp-street/wall-stree...
JumpCrisscross 8y ago
> in finance, strip clubs are almost de rigeur Worked in finance almost my entire career, from trading floors to investment banking to fund management. Never seen this.
- jiveturkey 8y ago
  as someone with a large expense account? ie, outside sales or client relationships?

halite 8y ago

> While the snake could be justified, the employee’s purchase of $1,200 worth of steak as snake food could not. Pythons only consume live prey. How would AI solve / detect this anomaly? I am curious.

jpatokal 8y ago
Most expense reports don't involve buying $1200 of groceries.

mrlucax 8y ago

There is a similar project here in Brazil [1]. They analyse public records of government officials and detects discrepancies with their refound requests for their "official" expenses. It's a civil society totally open project. [1] https://github.com/okfn-brasil/serenata-de-amor https://github.com/okfn-brasil/serenata-de-amor

dcosson 8y ago

Does anyone else feel like the entire system of expensing is kind of bizarre? This is kind of a tangent, but I feel like a few examples of expense fraud are less interesting than the fact that we're all using this deeply ingrained system that incentivizes cheating. I'm thinking just about travel expenses here, obviously taking out clients is somewhat different. But most companies will have a per diem for travel but you still have to itemize every cost within that range. It's a pain for employees, and they are forced to lend the company sometimes thousands of dollars for a month or two at 0% interest. I think you could also argue that it's a pretty regressive cost as I'd imagine it could be hard in some cases for lower-income employees or people with extenuating circumstances to front the cost of their work travel before getting reimbursed. There's also the constant effort of deciding what should and should not qualify as a valid expense, which isn't always black and white. Why not just pay the per diem in cash? Even aside from any actual fraud, I'm sure everyone has seen a lot of wastefulness when it comes to work travel, like going to relatively fancy restaurants every night or ordering extra rounds of drinks because you can expense it. Why should it matter to the company whether I'm doing that stuff or eating cheaply and pocketing the money? Why should it matter to the government for tax purposes whether I'm doing one or the other? I have no idea what a different system would look like, since this is a pretty fundamental part of how individuals and businesses are taxed. But it seems like there should be a better way.

Raidion 8y ago
I think one big difference would be taxes. A per diem over expenses would be considered compensation, and would involve both income and payroll taxes. Otherwise, I'd work for free, have the company give me a per diem of X a day and just not pay taxes on it and the company wouldn't pay payroll taxes either! The government is strongly incentivized to make sure that employers can't give employees untaxed money.
- ghaff 8y ago
  I don't think that's necessarily true. The per diem would presumably need to be reasonable, e.g. based on the (low) government per diem for the location. I know in my case, most expenses are itemized but you can expense a small fixed daily amount if you stay with friends. (I assume the thinking is that you buy some groceries, a bottle of wine, etc. when you stay with people that you can't really expense.)

bediger4000 8y ago

How expensive (to a corporation) are the low-level-employee expenses, fraudulent or not? I mean, nobody likes to waste money on fraud or strip clubs or extra steaks, but is the cost of AI Oversight more than you'd retrieve? How about expenses for directors/VP/Executive VP/CxO? Does this AI look over their expense reports, too? I would guess that even legit expenses from that level look a bit odd, but having AI audit employee expenses but not management expenses could contribute to a morale problem. Another place that this AI oversight could help society as a whole is having corporations/companies get audited for wage theft. Wage theft is supposedly the largest dollar amount of theft in the US, and it probably exists because audits are so seldom done. AI wage theft audits could have a large beneficial effect for employees.

motohagiography 8y ago
To answer the question about the value of "AI," it is a black box of pretexts you can use for leverage. Expenses policies are usually grey enough that if you want someone out of the company without significant severance, using the expenses policy as a pretext imposes costs on the target they probably won't fight. If a company wants to keep someone, there is no end to the excesses they will tolerate barring any liabilities greater than the value they bring. If they want to get rid of someone, the mechanism and the true reason are usually very different. Useful rule is to treat any company expense as a vulnerability that will be used against you in a severance negotiation. Arguably, a more accurate Turing test would be one where instead of being indifferent as to whether we are communicating with a human or machine - we decide that a machine is sufficiently intelligent if it can provide us with pretexts for political leverage against other people.
- ghaff 8y ago
  The example that was so hilariously ludicrous that you had to have real admiration for the PR people keeping a straight face was when Mark Hurd was forced out at HP because he supposedly expensed a business dinner that wasn't actually a business dinner. (Which turned out to have almost certainly been about more than a dinner but nonetheless doubtless a trivial sum of money in the scheme of things.)

deckar01 8y ago

My mom got flagged by a system like this a few years ago. The state was in a financial bind, so they hired an algorithmic auditing firm to claw back public funds from medical professionals who billed Medicare/Medicaid. They had been lax about the documentation they accepted so, they were able to claim just about anyone was missing years worth of legally required documents. She did in-home medical evaluations for rural communities and worked long hours. The amount of hours and miles she billed set off red flags, so they sent her a bill for tens of thousands of dollars and threatened her with criminal prosecution. It took her months and who knows how much in legal costs to fight it.

ChuckMcM 8y ago

This is one of those areas that I never "got" in that I just filed expense reports for what I spent and didn't see the advantage of getting an extra $10 or $100 from the trip. And I knew people who loved to push it as far to the limit as they could, like a manager who had a private table at a Sunnyvale restaurant and filed a huge reimbursement request for 'team lunches' and a baggie full of receipts. Betting that nobody would actually go and verify the receipts. So at some point you have to be in a somewhat adversarial relationship with the company right? I suppose if you felt the company was taking advantage of you this would make sense as a way to 'get back', but wouldn't you rather be working somewhere else instead?

x0x0 8y ago
The only time I've done anything like this is when the company did their best -- using Concur -- to avoid paying legitimate expenses. ie we got into an argument over whether my taxi ride home from SFO was "too expensive". I was like, um, I got in the fucking taxi, told it my address, and paid the bill. My employer used Concur and stupid rules to argue me into giving up and just paying the taxi ride out-of-pocket. I'm pretty sure that was the point, and many of the stupid expense "fraud" companies would notch that as a win. But I made my $57 back elsewhere, don't worry. And yeah, the fix was get an employer that wasn't ass.
- Klathmon 8y ago
  Similar story here. I work remotely, and my previous employer wanted me to come up to the office for a few days as we did every now and then. But I didn't really want to go this time, I had other obligations, but ended up going anyway. Expense report time comes around, and they complain that I don't have the receipt from the rental car company that includes the gas refill information, so they aren't paying that, and they pushed back on the $7-per-day economy parking I had my car in for the week. So I looked over the handbook and some stuff in Concur, saw that I was entitled to like $10 for a breakfast each morning, and like $20 for dinner each night without a receipt. So I added a couple of those in there, it all added up, and they happily paid it... And while that alone wasn't a major reason I left the company, stupid penny-pinching stuff like it was a big part of it.

jpatokal 8y ago

I've used Concur as both a user and expense report approver, and I suspect these "AI" claims are overblown. What actually happens is that Concur can import transactions directly from a corp credit card and identify a lot of them (airlines, hotels, restaurants) automatically. From what I've been told, the auditing bit consists of looking for anomalously high charges in categories ($1000 flight OK, $1000 restaurant bill not so much) and checking against a blacklist of banned establishments (gambling, adult entertainment, etc).

number_six 8y ago

I just got a job with a corporate card, and we have SAP Concur, I assume that everything will be scrutinized by some kind of AI - as it automatically reads the receipts and essentially tells me that it is doing so. One steak dinner is not worth my job...

blue_pancake 8y ago

This is unnerving. I don't really have an issue with people who commit fraud being caught in the act. It still bothers me that we're closing out the 2010s and most of what we've achieved as an industry is make it easier for employers to surveil their people. The story of the 20th century included a moon landing and ubiquitous personal computers. The 21st century's story seems to be about advertisers, health insurers, and employers using technology to get every edge on the common people that they can get.

mc32 8y ago
Being able to find reference material, how-tos, self-paced, self-led education seems like a really good thing we’ve achieved as asiciety. Obvs this carries over from the last years of prev century, but it’s now uniquitous.
tomatotomato37 8y ago
That was the story of the late 20th century. The story of the early 20th century was industrialized warfare killing 37 million people because a prince got shot.

deleted 8y ago

[deleted]