Midlands businesses failing to rein in expenses

A leading Midlands expert in business risk has warned that companies are not doing enough to monitor employees’ expenses.

David George, associate partner and head of Deloitte’s information and technology risk services practice in the Midlands, said businesses in the region were overlooking one of the largest controllable costs in failing to rein in expenses.

“In tougher economic times cost control is more important than ever for employers,” he said.“By implementing the appropriate controls and monitoring procedures, management will not only get assurance that fraud or error is limited, but may also achieve significant cost reductions.”

Mr George’s comments come in the wake of a Deloitte survey, which found that 37 per cent of companies have experienced cases of fraud or expenses manipulation in the past year.

According to the research, a further quarter of companies said they would not feel ‘highly confident’ answering questions from HMRC about their employees’ expenses. 

One fifth of respondents did not have a policy in place to ensure senior staff approved expenses and half of the companies surveyed did not have limits on expenses.

“In the Midlands we have found that even when there is an expenses policy in place, there are often significant deviations from it which go unnoticed,” said Mr George.

“These have often been exacerbated when the company has provided corporate charge cards but failed to put in place sufficient restrictions.

“The businesses that are examining expenses in the broadest sense, for example revising the travel policy to favour carbon friendly company cars, are those making the most substantial savings.”

Another way companies could save money, according to Mr George, is to reclaim VAT from expenses, yet the survey revealed that nearly one quarter of firms (23 per cent) are failing to do this.

The survey also found that more than half of companies (53 per cent) investigate less that two per cent of their employees’ expenses claims.

“There is increasing pressure on companies to reconsider the way they incur, monitor and reimburse employee expenses,” said Mr George.

“The lack of investigation into employees’ expenses highlights the potential for inappropriate claims to go unnoticed. 

“HMRC has increased its focus on the level of controls that companies have in place to limit the likelihood of fraud and error.

“Those companies without suitable policies are deemed higher risk and are more likely to be the subject of checks and enquiries.

“Well-controlled and managed systems will help to mitigate behaviour-based penalties and ensure compliance with regulations.”



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