Algorithmic auditors are exposing employee expense fraud

https://www.bloomberg.com/news/articles/2018-11-14/ai-can-now-catch-lies-on-your-expense-report

by tchalla • 8 years ago

100 165 8 years ago

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

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. :)

ghaff19• 8 years 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.)

Sgt_Apone• 8 years ago

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.

This is the part that kills me. In my org people frequently travel at the last minute to Asia for weeks at a time. Those claims sometimes end up into the five figure range depending on the time of year. People have been almost stranded because they've maxed out their personal cards.

jandrese10• 8 years ago

On the other hand, getting 2% back on that $3000 because you used your own card is a nice perk.

cwmma• 8 years ago

the $3000 on your own card is actually a perk for some people as it allows you to get credit card points

thrower123• 8 years 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• 8 years ago

What? Why? Wtf?

CaptainZapp7• 8 years 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.

jandrese10• 8 years 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_pancake2• 8 years 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.

CaptainZapp7• 8 years 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!

dpwm2• 8 years 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.

CaptainZapp7• 8 years 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.

lawn• 8 years ago

People don't cheat because the large repercussions if caught, they cheat if it's easy to get away with it.

If nobody even reviews your expenses you can get away with buying alcohol (as is the case at our company...) or as you say strip club visits.

CaptainZapp7• 8 years ago

If nobody even reviews your expenses you can get away with buying alcohol

When travelling on business this was completely acceptable as long as it wasn't excessive or stand-alone bar bills. A bottle of reasonable wine, or a couple beers with dinner was considered a no-brainer and fully reimbursed.

On a sidenote: When I was on training in New York dinners tended to be expensive. Often, but not always, more expensive than what I would consider reasonable. For example: 80$ (in 1996 $) for a nice steak dinner is not something I would consder reasonable.

When I came back to home office I made them aware that there where a couple or three of such dinners and they should just reimburse me what they deem reasonable, or reflected in the expense policy. I was reimbursed for the full amount. (Probably a number of 7$ deli lunches helped).

That was the Swiss subsidiary of an American software vendor.

cascom2• 8 years ago

Most of the expense “fraud” I’ve seen has actually been implicitly or explicitly condoned by the firm - e.g corporate wants higher sales - sales team delivers, in the process taking clients to expensive dinners, strip clubs, skiing etc. (all out of policy) - management is happy and doesn’t want to “know”

UncleEntity• 8 years ago

I used to, a long time ago, work in a small office where we were expected to drive around and "do sales" during the slow hours. Of course we didn't but my boss wanted corporate to think we did and he would get upset if my expense report was lacking so...every mile I put on my VW Bus the entire time I worked there ended up on the expense report.

It used to be a chore keeping up with it so if they ever came out and looked at my odometer it wasn't obvious what was going on since I had to account for my actual commute to/from work but I managed to keep corporate happy which kept my boss happy which made that crappy job somewhat bearable.

WalterBright• 8 years ago

Theft of office supplies is pervasive, even by well-paid people.

ghaff19• 8 years 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.

cascom2• 8 years 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.

ghaff19• 8 years 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 :-))

smogcutter• 8 years ago

Anti-fraud software salesman has discovered that fraud is rampant! News at 11!

Declanomous2• 8 years ago

I got chewed out when I expensed WiFi at a hotel once because "it seemed unlikely that I was using it for business." The funny thing is that I spent way less than everyone else on that trip, to the tune of maybe $400 over the course of 6 days (I rarely take cabs because I prefer to walk places, and I find large fancy restaurants in major cities to be bland to the point of interchangeability, so I typically eat at smaller local places), but the fact that I spent $40 on WiFi was a huge problem.

I'm sure this is the kind of fraud that this thing would detect. "Ah, you split your meal between two different food stands! That is fraud!"

jandrese10• 8 years ago

If 30% of your employees are committing "fraud" on expense reports you either work for a criminal organization or your expense reporting system is broken in some way.

I wouldn't be surprised if a lot of what they are counting as fraud is simple errors due to a badly designed expense system. For example, when you reimburse a hotel you have to manually create a second category with an obscure label for the taxes, and anybody who hasn't been told about it never knows, so they put the whole cost of the hotel room in the hotel line and suddenly are both overbilling (the room charge) and underbilling (the taxes).

Another easy way to commit fraud is to forget to include your travel hours in your expenses. So you aren't charging them for the time sitting on the plane, which is a violation of reporting guidelines and expense charging guidelines.

There are tons of ways an ordinary employee can screw up their expense report without realizing it. This is why they are supposed to be checked by a knowledgeable third party before being committed. If the person in the example was blatantly overcharging for hotel rooms for years without being caught then that's a failure of the expense reporting system.

ghaff19• 8 years ago

For example, when you reimburse a hotel you have to manually create a second category with an obscure label for the taxes

That's a function of your expense system/requirement. I certainly don't take the time to itemize every line item on a multi-day hotel bill. I just put the amount and the number of days.

Another easy way to commit fraud is to forget to include your travel hours in your expenses.

That assumes you're charging a client by time--including travel time. I must say it was nice the one time I did some legal work to be able to bill for travel and random administrivia related to the case.

Scoundreller4• 8 years ago

Sounds like the accounting department created the system to fit into their workflow.

They can probably claim a credit on the sales taxes they’ve paid on the sales taxes they have to remit on their own sales (VAT/GST/HST).

Now it depends if the sales tax they paid is eligible for that (in country or foreign).

Merad• 8 years ago

I've worked at places in the past where expense reporting felt broken by design. For example, one employer didn't allow alcohol to be expensed, but they did allow $75 per day for meals, no questions asked (no receipts required). Naturally it was very common to end a conference or whatever with a very nice meal and drinks that would be expensed across a weeks worth of meal costs.

bsenftner• 8 years 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.

ghaff19• 8 years 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• 8 years 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.

XCabbage7• 8 years 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• 8 years 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_.

XCabbage7• 8 years 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?

detaro2• 8 years ago

The initial examples clearly list that the employees pretended the charge was for something else. One can reasonably argue the employer should consider covering those things, but the process should be honest on both sides. (Clearly tell employees what's covered, how to submit it and how to ask for clarification/extra consideration, in exchange for accurate claims)

XCabbage7• 8 years ago

None of the examples "clearly list" this. All of them permit this interpretation, but it's far from clear.

dillondoyle• 8 years ago

Lol big local strip joint in Denver is also a 'steak house' (they serve some type of meat and call it steak) and now I'm wondering if expensing is the reason for it haha

gniv• 8 years ago

I think you misunderstood.

One employee traveling for work checked his dog into a kennel and billed it to his boss as a hotel expense.

I read this as "employee pretended that the kennel expense was a _human_ hotel expense". (And, presumably, the employee stayed with friends/family)

XCabbage7• 8 years ago

I read it as "the expenses software requires expenses to be filed under one of a small number of categories, and the employee went for 'hotel' because it was the closest one available". I guess both interpretations are possible.

Someone12343• 8 years ago

But as an aside why shouldn't they be covering a dog's kennel bill? If the employee only needs to utilize the kennel because of the work-related travel, that is a travel related expense.

Seems like great software if your goal as an employer is to make your employees outright refuse work-travel or to find a different job without it.

Don't misunderstand: Outright fraud is wrong. But in a lot of cases employer's travel expenditure policy was never fit for purpose, and employees worked around the problems by submitting mis-characterized claims like the dog-kennel example.

Instead of fixing the policy, they'd prefer to ignore WHY employees are doing these things (i.e. talk to them) and just lash out with punitive measures.

rexaliquid• 8 years ago

by analysing the receipts that the employees submitted.

The article implies that at least some of those receipts were faked.

ballenf2• 8 years ago

The article reads to me as a press release from the company with the barest of value-add from the author.

There's a good chance this company had humans review the receipts and calls it "AI".

puranjay• 8 years ago

Slightly OT, but I wonder if you should be able to claim yoga/gym or even clothes as an expense. If being a consultant means projecting a certain image (fit, well-dressed), shouldn't you be paid for maintaining that image?

ballenf2• 8 years ago

The IRS in the US has rules that designates things as taxable income or not for many of these questions. Businesses can still reimburse regardless of IRS categorization, but you may be taxed on the reimbursement as income.

To avoid that issue, most businesses will avoid reimbursing for incidentals that should be considered income. Suits or standard office clothing, I believe, are taxable in most circumstances. Uniforms are not. Of course there's lots of grey areas that keep accountants in business. I'd assume yoga would count as an exercise allowance and not be taxable, but that's just a guess.

jasode2• 8 years 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/

_Codemonkeyism• 8 years 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• 8 years 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• 8 years ago

Interesting story. :)

I think businesses can he really hard on fraud without being hard on what constitutes a valid expense.

Scoundreller4• 8 years ago

Similar experience at an employer where I was grateful to be travelling on their dime.

Took the bus and metro home from the airport - $3 claim rejected because I didn’t get a transfer as proof (which wasn’t needed to ride on this trip).

Yet if I drove, I could have claimed 50 cents a km or something, no proof required.

gav• 8 years ago

I've heard about "hide the hat" years ago––you lose your hat on a business trip and have to find some other way to expense it.

JumpCrisscross• 8 years ago

incorrect hotel amounts

What does this mean?

asaph• 8 years ago

Amount claimed on expense report != amount paid to hotel.

dv_dt4• 8 years ago

Wait, why should she lose her flexible medical benefits? Shouldn't recovery of the expense fraud be a separate legal process from taking of personal medical accounts?

Why do we connect medical benefits to employers?

vertexFarm• 8 years ago

Good question. It's a very strange method of motivation or coercion that we've all just kind of accepted into our lives, and we feel lucky to even have that.

Well all of us in the US, anyway. For some reason it doesn't work that way in most places on earth.

Medical job-lock is a real thing that happens, and most of us just discount the possibility completely until an unexpected problem crops up. AMHIK. Everyone be grateful for your health while you can, and plan for the future.

jasode2• 8 years ago

Wait, why should she lose her flexible medical benefits?

Because it was one of those "healthcare savings flex accounts" where the company puts in "virtual dollars" to pay for some types of health care. Unlike unused vacation days that requires payout on the last paycheck by law, or a 401k account, this type of "flex account" is really a convenient accounting category that's administered purely by corporate discretion.

If the employee gets fired for just cause, the company decided it didn't want to let him/her walk away with the flex account. For the retirees that left on good terms, they do. It's just the way they did things. I think the idea is that the the ex-employee is now viewed as a criminal so the company feels justified in withdrawing discretionary benefits.

The regular type of employee health insurance that one could extend with Obamacare or COBRA was a separate thing.

(Ninja edit to reply below: it was not an FSA or "cafeteria" plan that deducted real dollars from the employee's paycheck. It was literally "virtual dollars" that the company allocated to the employee. But the virtual money turned into real money when the retiree used it to pay Medicare premiums. If there's an industry-wide jargon for this type of virtual bank account for healthcare that the employee never directly contributed to, I don't know what it is.)

desdiv• 8 years ago

Why do we connect medical benefits to employers?

It could arguably be traced back to the war time rationing of WWII:

To combat inflation, the 1942 Stabilization Act was passed. Designed to limit employers' freedom to raise wages and thus to compete on the basis of pay for scarce workers, the actual result of the act was that employers began to offer health benefits as incentives instead.

[0] https://www.griffinbenefits.com/employeebenefitsblog/history...

[1] https://www.chicagotribune.com/news/opinion/commentary/ct-ob...

CPLX• 8 years 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.

jakobegger6• 8 years ago

    if (expense_for_flight > 2 * average_expense_for_flight) {
        flag_for_review()
    }

gnulinux• 8 years ago

"AI"

jacobush• 8 years ago

A.I. = Almost Intelligent

rozim• 8 years ago

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

mv4• 8 years ago

this quote:

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

crooked-v• 8 years 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.

halite• 8 years 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.

jpatokal3• 8 years ago

Most expense reports don't involve buying $1200 of groceries.

mrlucax• 8 years 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

dcosson2• 8 years 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• 8 years 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.

ghaff19• 8 years 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.)

ghaff19• 8 years ago

Why not just pay the per diem in cash?

It's sometimes done. But, when there's a system like that, the per diem amount is usually low enough that you'd have to stay at a low-end hotel and eat fast food if you don't want to be out of pocket.

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.

You call it wastefulness. I call it a small compensation for being away from home, dealing with airports, and otherwise living out of a suitcase.

jpatokal3• 8 years ago

FWIW, I used to work for a company that paid cash per-diems on top of accommodation.

Worked out a treat on an extended gig to Thailand, where I was pulling in $70/day while my actual expenses were closer to $5!

pertymcpert3• 8 years ago

Yep. Especially if you're away at the weekend, you're away from family, and need to find time to do weekend jobs at some other time. Traveling for work is tiring and inconvenient at the best of times. A $50 meal is the least a company could do.

titanomachy• 8 years ago

employees are forced to lend the company thousands of dollars at 0% interest

This may be technically true, but in practice people charge things to their credit cards and don't actually pay the expenses until a month later anyway. And my company reimburses me within a few days, I always assumed that was normal.

Scoundreller4• 8 years ago

And you get some tax-free points for later.

gamblor9563• 8 years ago

Per diems can be paid up front, or after the fact. My workplace does both, since we send a lot of employees overseas very regularly. The itemizing requirement for per diems is a feature of the tax code, which requires expense reports to be itemized or else treats the per diem as income to the employee. (These same rules also provide daily caps on the untaxable portion of per diems, divided between food & incidentals, and lodging.)

For the most part, employees paid per diems choose the cheapest option for food and pocket the difference. The people eating fancy are the ones, like the C-suite, that get to expense their meals since the per diem limits don't apply to those expenses.

And let's face it: if your company is making you travel away from home for work, they need to provide a little something to make up for it. Letting the employees eat fancy meals on company dime is just part of it.

b_tterc_p• 8 years ago

While the company doesn’t pay you interest, you can rack up significant amounts via credit card cash rewards and loyalty rewards. So, the ROI on that risk free loan can turn out to be pretty great.

bediger40002• 8 years 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• 8 years 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.

ghaff19• 8 years 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.)

chris_mc• 8 years ago

I always remember how they used to nickel and dime me about hotels and flights (I couldn't even get the "comfort" seat on two 9 hour flights in a row), however the Director positions and up (about 20 people at my office) used to fly First Class everywhere. I had to fly from SF to Germany to India in the worst, smallest, most uncomfortable seat for 18 hours in a row, but they could spring for First Class from SF to LA!

dv_dt4• 8 years ago

Another issue is that many companies (and most governements), have policies prohibiting the acceptance of meals or other gifts in excess of certain amounts, that I would guess are routinely exceeded. Having too detailed a records on expense accounts attached to dealing with those types clients could lead to problems for the clients and the company.

bediger40002• 8 years ago

This would be motivation to not have some robot auditor - it probably demands enough detail that expense accounts could track down those accepting gifts/meals of too much value. It would be another case of "because we can detect it", sort of like DUI as soon as breathalyzers were in use.

robaato• 8 years ago

Visited a lawyer friend in Hong Kong (pre takeover) where client entertaining frequently required visits to hostelries of ill repute - all claimable and signed off.

Knew someone who sold his company and agreed to stay on for X months handover period. The new owners tried to go back and prove from previous expense claims that fraudulent activity had occurred and that they shouldn't pay some amount previously agreed. You need to be careful.

A long time ago, a project manager was paid 3X per month for a flat in Germany because at their level that was what they were entitled to. Then new junior person on same project came in, and happened to take over same flat and claimed X (with receipts). At the time this was just ignored - different folks different rules.

deckar01• 8 years 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• 8 years 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• 8 years 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• 8 years 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.

jpatokal3• 8 years 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• 8 years 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_pancake2• 8 years 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• 8 years 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• 8 years 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.

Algorithmic auditors are exposing employee expense fraud

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