How to identify employees’ fraudulent use of purchasing cards

Published | Friday, July 29th, 2016

Purchasing cards (P-Cards) are increasingly used by businesses and government organizations to reduce the costs of traditional procurement processes.

While this makes a lot of sense in terms of efficiency and effectiveness, P-Cards are particularly prone to fraudulent use because they are so easy to use. An employee may also realize that review and approval processes have become lax and use P-Cards in a variety of ways that provide personal benefit at the expense of the organization.

“Any chance I can expense this cow?”

An example of an actual P-Card fraud is a manager in a district branch of a telecommunications company who used his P-Card to pay for cattle bought at an auction for his hobby farm. He knew that his card usage was not reviewed in detail by senior management. The fraud came to light when data analysis was used to identify a purchase made on a weekend and with a non-standard merchant code.

On the other hand, just because it looks like a fraud, it doesn’t necessarily mean it is. Of course, while data analysis can provide a good indication of a suspicious activity, it is always important not to jump to conclusions without appropriate investigation. We know, for example, of a case in which transaction monitoring identified a police officer purchasing alcohol at a liquor store with an official credit card. It turned out that the officer was teaching a breathalyzer usage course and needed the alcohol for demonstration purposes. It would not have been a good idea to accuse the officer of fraud!

The following are some examples of common data analysis tests used to identify indicators of employees’ fraudulent use of P-Cards:

  • Identify transactions made on weekends, holidays, or while the employee is on vacation
  • Look for P-Card holders whose usage is abnormally high—both in cost and frequency—compared to others in a similar role
  • Identify multiple purchases of the same item or service within a specific timeframe. One purchase may be legitimate, the other may be intended for personal use.

Want to learn more about how to combat purchasing card and T&E expense fraud? Download the free guide here

  Get in touch with us!

In compliance with Section 45 of the ECT Act please confirm the following:

I would like to receive future communication from CQS.

Leave a Comment

Your email address will not be published. Required fields are marked *