February 17, 2020
Employees who are unfamiliar with your company T&E policy may accidentally submit an out-of-policy expense occasionally. While there are certainly honest mistakes from time to time, some employees can get pretty creative with their expense reports.
Below are eight real expenses flagged by AppZen:
Lunch with oligarchs
Lunch with foreign officials is a big no-no in the eyes of the Foreign Corrupt Practices Act and U.K. Anti-Bribery Act, which sees lunches, gifts, or “anything of value” as bribes (which violate these regulations and result in enormous fines). Our AI will flag attendee names on meal receipts to make sure your employees aren’t dining with any foreign diplomats or heads of state, keeping your company out of regulatory hot water.
An employee submitted a receipt for gold-plated cufflinks. The reason? A gift to a famous rapper. It’s unclear if he ever received them.
Starbucks gift cards
We see this one all the time! Employees will add a $20 gift card to their morning coffee run on a business trip. The receipt is reimbursed by the company, meaning you’re footing the bill for several more lattes than you intended. A human auditor probably wouldn’t question a receipt for $25 from Starbucks, and it would pass the meal limit thresholds set by your policy, but our AI will scan the itemized receipt and flag the word “gift card’ to an auditor’s attention for review.
“Airbnb” on a friend’s couch
In this creative scheme, two friends were in cahoots. One of them posted their home on Airbnb at a ridiculously high price that no one would ever pay. Their associate who participates in the scheme would stay there whenever he was in town and submit the listed price for reimbursement, splitting the money between themselves. AI noticed the higher-than-average room rate for the region and flagged this to auditor attention.
Gear from Lululemon
You’d be surprised how many clothing receipts we see. In this bold move, an employee expensed over $250 of clothing from Lululemon.
There wasn’t even a business reason listed – it’s possible they thought that it wouldn’t be caught, or felt justified in their purchase. This trick didn’t pass our AI, which flagged the retailer as an out-of-policy expense.
Strip club “services”
Strip clubs like Spearmint Rhino typically have DBA names they use on receipts so they can stay undetected by expense report approvers. Our AI knows that “K-Kel, Inc” is not a name of a restaurant, but the DBA name for Spearmint Rhino (and you’d be surprised how often this is flagged!)
An “extramarital” travel companion
Sometimes an expense report may seem too high for one person. In this case, the expenses were being used to cover an executive’s travel costs, including business class airfare and meals for a companion on a business trip to Europe. Company investigations later revealed that this wasn’t for the spouse.
Cigars for the team
Whether it’s buried in an itemized receipt or under an unfamiliar brand name, AI can detect the brand names of hundreds of out-of-policy purchases. In this case, a manager expensed cigars for his team as a reward for a great quarter. While we’re totally on-board with perks and rewards for employees, this manager might want to pick something that’s within their company policy next time.
While AppZen is not the judge or jury, AI can flag unusual, out-of-policy, high risk, or potential regulatory violations to your attention. Find out more about AI-based spend auditing in our State of AI in Business Spend report.
Josephine McCann is a Product Marketing Manager at AppZen, the leading AI-driven platform for modern finance teams.