Sensational stories of financial fraud and how to keep your business out of the headlines

In today’s digital environment, businesses are hyper aware of fraudsters and scammers, seemingly looming around every corner. After all, history is littered with sensational examples of good (and not so good) companies gone wrong. 

The good news is that protection is just a click away! AP (accounts payable) automation can help you build strong defense mechanisms against fraud and keep your business out of the headlines.

In this blog, we’ll take a look at a few sensational examples of accounting fraud, and share ideas about what you can do to protect your business from a similar fate.

Kraft Heinz

In September 2021, food and beverage company Kraft Heinz agreed to pay US$62 million as part of a settlement with the SEC. Over the course of three years, Kraft is accused of many accounting inconsistencies and fraudulent practices. Both Eduardo Pelleisone, the company’s former COO, and Klaus Hoffman, the former CFO, were implicated. Read the entire story here.

How AP Automation Helps: Automated document matching.
This process matches vendor invoices, purchase orders, and payment information, which helps prevent the payment of fraudulent invoices. 

A Family Affair

From 2017 to 2018, two California state employees defrauded the California Office of AIDS out of more than US$2 million. A probe into fraudulent expense charges in the State of California’s Department of Public Health began with an investigation into a shredded Disneyland itinerary and led to the discovery of over US$185,000 in expenses to Disneyland and Disney shops passed off as legitimate expenses. Read the full story here.

How AP Automation Helps: Transparent expense management.
Automated AP solutions allow employees to upload receipts and route them for approval in real-time, rather than at the end of the month. This creates a digital audit trail of all expenses and approvals, with data flowing directly into the rest of the AP system for further approvals and safeguards. 

Himilayan Salt Lamps and Burned Receipts

In 2022, a deep dive into the Mississippi Department of Corrections’ (MDOC) accounts uncovered widespread fraud at the facility. According to their December audit, the previous MDOC leadership spent thousands of taxpayer dollars to upgrade the executive suite with six TV sets, and bought other items such as massage chairs, rugs, art and Himalayan salt lamps for their meditation room. Read the full story here.

How AP Automation Helps: Detailed approval matrices.
AP automation software solutions provide detailed, layered, automated approval matrices based on budget, department, etc., to avoid unauthorized purchases and eliminate the need for a manual paper trail. All documents and processes are securely accessible through the cloud at any time from anywhere, and approvers are notified online as soon as reports are submitted. 

Online Accounting Scams

In 2022, a scammer succeeded in tricking an accounting team into wiring him money through falsified bank details. The victim? Baltimore’s Department of Finance. Their accounting clerk received an email to route payments of an existing vendor to a new account. The clerk made the changes without confirming the legitimacy of the email with the vendor. Roughly $62,337 USD was paid to the scammer before the actual vendor contacted the department regarding the payment delay. Read the entire story here.

How AP Automation Helps: Automated AP payments.
Managing payments through an AP automation provider helps increase controls, since payments can be easily passed through several layers of approvals before they are released. Some providers also take care of vendor management, including collecting, updating, and securing sensitive vendor payment data, and even assuming liability for the payment. 

Pharma Karma

The once high-flying UAE healthcare provider, NMC Health, is nursing heavy losses after discovering a hidden debt of about $4 USD billion in 2022. The hospital allegedly used fake invoices and documents to place orders for medical supplies and then sourced credit from banks to finance the transactions. The scandal also involved two other healthcare companies, Nexgen and Neopharma, both controlled by the NMC founder, BR Shetty. Auditing firm EY also came under fire for repeatedly failing to account for the missing billions. Read the full story here.

How AP Automation Helps: Automated end-to-end AP workflows.
Software solutions can automate your entire AP workflow - from purchase orders, to invoices, to payments, to employee expenses – and will sync directly with your financial system. Discrepancies like duplicate invoices are automatically flagged and reported. Every detail of every transaction is stored in a central platform, making internal and external audits simpler and easier. 

Why choose Quadient Accounts Payable by Beanworks?

Fraud—both attempted and actual—is on the rise, and criminals are using increasingly innovative tactics to dupe businesses out of large amounts of cash. The financial failures depicted above show how important a robust accounts payable workflow is, to maintain good financial health and a positive public reputation. There has never been a more important time for businesses to protect themselves, and AP automation is the best place to start. 

An AP automation solution like Quadient AP helps deter fraud by eliminating manual processes that provide opportunities for record tampering and falsified approvals. Quadient AP also uses artificial intelligence to automate repetitive tasks in the accounts payable process, freeing up more time for high-value activities such as ensuring every transaction is legitimate. 

A robust, reliable, and scalable AP automation solution like Quadient AP can:

• Increase transparency by automating manual tasks and digitizing paper records.
• Add more controls when it comes to approvals for expenses, invoices, purchase orders, and payments.
• Segment the invoice approval and payment approval processes so that there is end-to-end visibility.
• Consolidate all AP workflows to run through a comprehensive system so everything is managed in a single place. 

Are you ready to protect your business and automate your AP workflows? Book your demo with Quadient AP today!