Expense violations have skyrocketed during COVID

Employees are getting bolder with their expense reports while working from home.

Expense violations skyrocketed 292% in 2020, according to the 2021 Spend Report by Oversight, an expense management platform. Employees are using workplace funds to purchase office equipment, electronics and meals, sounding alarm bells for HR managers.

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At the start of COVID, employers were scrambling to support a workforce that had moved the office into their homes, says Terrence McCrossan, CEO of Oversight, an expense management platform. Employers were more flexible than usual with what they allowed employees to expense.

“All organizations have had to balance how to give employees the flexibility they need to do their job in a remote environment, with the risk of those employees doing things that could be wasteful or a misuse of company funds,” McCrossan says. “Early on, they gave a lot of flexibility to make high-risk purchases at volumes that were unforeseen pre-pandemic.”

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The switch to remote work meant that employees were outfitting their homes with office equipment like computer monitors, printers, desks and chairs. Spending in this category was seven times higher in 2020 than during the same period in 2019, the report found.

Miscellaneous spending is an especially high-risk expense category because it’s difficult to decide what is or is not allowed, McCrossen says. Big screen TVs, headphones and other pricey equipment are items employers have been conflicted over throughout the pandemic.

“Employers have to decide how much friction they want to create with their employees,” he says. “Do they just reimburse and trust, or do they scrutinize the purchase and run the risk of disenfranchising employees? Now, employees are circling back and ensuring they’re for good and reasonable business purposes.”

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With remote work continuing indefinitely for some organizations, managers need to rethink their policies and set firm guidelines for appropriate spending.

“Managers should communicate frequently and clearly to all employees across the business, so there's no ambiguity in terms of what the expectation is for employees to be good stewards of company dollars,” McCrossan says. “Then it’s incumbent on the management approval process or audit technology to ensure employees are following that.”