News Article - 08 December 2009
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Recent reforms of the parlimanetary expenses system will require peers to provide receipts for expenses incurred, and proof they do not permanently reside in their second home. The changes are designed to prevent fraudulent claims for lucrative overnight expenses, after peers made similar claims that came to light following the 2009 parliamentary expenses scandal. Since news of the expenses scandal broke in May, the issue has been covered extensively in the media. Opinion polls have regularly highlighted the detrimental effects the revelations have had on the major political parties. Just after the scandal hit, Labour’s overall position fell to 21%, its lowest in polling history. The scandal has significantly affected public faith in parliament, and government efforts to repair the damage have been mostly unsuccessful. Speaker of the House John Bercow recently labelled the scandal the worst crisis to have hit the Commons since its bombing during World War II. Whilst the parliamentary expenses scandal may seem like an isolated incident, there is evidence that expense-related fraud is worryingly common in the business world. A recent survey by Deloitte reveals a third of companies experience expenses fraud, and a quarter of companies reported they would not be highly confident answering questions from HMRC regarding their employee’s expenses claims. With only 2% of expenses claims being investigated, businesses are not committing sufficient resources to fraud prevention and risk serious damage to their reputation if fraudulent activity is discovered. The prevalence of expense-related fraud can also negatively affect profitability. Research shows employee expenses are the largest controllable cost a company has, yet 23% of companies do not even have a policy in place to reclaim expenses-related VAT. In addition, perceived difficulties in data entry and categorising expenditure have led many companies to miss opportunities to reclaim significant amounts of input VAT. With cost-cutting so high on the agenda during the credit crunch – and improved margins necessary to remain profitable - operating a more transparent system of expense claims can help businesses cut costs in the right areas. Transparency of information is the best method to help reduce the scope for fraudulent claims, and discover the most likely areas for fraud to occur. A scalable, organisation-wide software solution is one of the best investments businesses can make to keep track of employee expenses and ensure all claims are backed by official receipts and auditable information. With FocalPoint expenses management software from Access, data can also be organised by expense type, department or even individual staff member, allowing maximum transparency over expense claims. With this level of data at hand, businesses can significantly reduce their financial risk, and maintain the reputation that they have built up over time.

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