Are managers to blame for cardholders’ unethical and criminal acts, or do they get an undeserved bad rap? A new internal fraud incident involving a Commercial Card got me thinking more about a manager’s role in fraud prevention and detection. Keep reading to learn about the fraud, manager hurdles and nine tips to help managers be successful.

The Fraud

A friend told me about a sales rep his company recently fired for using a company card for personal purchases. “Jane,” a long-time trusted employee, allowed both her husband and adult daughter to use her card for personal car rentals. In addition, Jane used her card for personal food purchases that did not have any business purpose. Because of her sales position, charges for car rentals and meals were common, so they did not raise any red flags.

The company, which had a corporate liability card program, uncovered the fraud after an automated toll road charge appeared on Jane’s card. It had occurred in conjunction with the daughter’s car rental. When the company did research to determine the associated business activity, they soon realized Jane was in the office during the purported trip. Things went downhill from there.

Is the Manager at Fault?

Upon hearing about Jane, my first question was, “Why didn’t her manager catch this?” When fraud of any kind—Commercial Card, expense report or other—goes undetected, it is easy to blame the employee’s manager. However, while managers’ lack of oversight is often a factor, we should dig deeper. Do organizations set up their managers for success or failure?

The friend who told me about Jane is a manager. He admits he only does a cursory review of his employees’ expenses because he has too much on his plate. He shared, “I only have so much time every day. Administrative tasks like expense reviews are not my priority because the risk of potential expense fraud is lower than the risk to my company if I neglect my unique job duties. At the end of the day, I have to trust my employees, so I can focus elsewhere.”  

Like many organizations, his company also enforces a monthly deadline by which managers must complete the expense review process. While the intent is to hold managers accountable for their important role in fraud detection, the downside is hurried sign-offs without attention to detail. Indeed, to avoid being called out for tardiness, my friend says he meets the deadline regardless of whether he actually performs a complete review. Approaches like this can be a matter of manager survival.  

Manager Hurdles

• The manager is on overload, juggling too many other responsibilities.
• The manager resides in a different location than the cardholder (this was true in Jane’s case) and might be out of touch with an employee’s daily activities, unable to recognize fraudulent expenses.
• The manager is responsible for too many employees. We can debate how many is too many, but try to determine how long it takes to review one cardholder’s monthly transactions/statement thoroughly. Multiply by a manager’s number of cardholders to get a sense of the commitment. 
• The organization does not require any related training or provide any helpful tools.

Helping Managers Be Successful

I asked my friend what would help make the reviewer/approver role easier. Our discussion reinforced best practices, but also touched on lesser-used strategies. The tips include:

1. Pursue senior management involvement in communicating the importance of the manager’s role, so they hear it from the top.
2. Specifically design training for managers; make it relevant. While they need to understand the cardholder’s role, too, they do not need to learn the same details. Learn more...
3. Require managers to sign an internal agreement like cardholders.
4. Mandate annual training on card policies, as well as ensure managers are trained on red flag behaviors that could indicate fraud.
5. Require cardholders to provide key information for each charge. “Car rental for business trip” is too vague. “Car rental for August 31 meeting in NY with ABC Company” is much better.
6. Utilize electronic review tools that managers can access at any time. Yes, some organizations still have a paper-based process, which is more tedious.
7. Send managers a weekly report of their cardholders’ charges. My friend observed that this would make him more likely to spot oddities and ease the monthly review requirement. Then he would not be overwhelmed with seeing a month’s worth of charges for the first time and trying to recall what happened weeks ago.
8. Provide other reporting, too, such as purchasing  history for the manager’s department, which I described in a 2014 blog post on fraud, along with other tips.
9. Offer an at-a-glance reference of what managers should look for when reviewing expenses.

I also wonder if organizations should encourage or require a recurring “meeting” on managers’ calendars to reserve time each week and/or month for expense reviews. This sends a message that the task is important. What do you think? Feel free to comment and share any additional tips. 

See also other available resources related to card program controls.

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…

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