The gender gap in this area may be even greater than you think.
Men are the biggest offenders of expense report fraud by a wide margin, according to the latest data from AppZen’s Expense Report Audit platform. Of all expense fraud detected by AppZen, only 12.3 percent of fraudulent reports were submitted by women, while 87.7 percent were submitted by men.
What causes the gender gap? Although it’s hard to nail down the exact reasons, there are a few possible explanations to consider.
One explanation is that there are slightly fewer women than men in the workplace worldwide. The Pew Research Center analyzed the labor force data of over 114 nations between 2010 and 2016. Across all these countries, the share of women in the workforce is 45.4 percent. Since there are fewer women in the workplace, women have less opportunity in general to commit expense report fraud.
So, to norm for the disparity in the quantity of women versus men in the workplace, we went ahead and did the math: Even if the workplace were split 50-50 in terms of gender, still only 13.54 percent of expense misconduct would be committed by women. Accordingly, the “fewer women in the workplace" hypothesis can be discarded.
There are also fewer women in C-level positions; as reported in a previous AppZen blog post, holders of these jobs are seven times more likely to commit expense report misconduct and fraud than the average employee. C-level executives that commit expense fraud often feel entitled; they might believe that internal policies don’t apply to them and won’t be enforced if they are caught.
According to the U.S. Bureau of Labor Statistics, only 28 percent of C-level positions are held by women. So, again, norming for the math: In a perfect world, in which the entire office and the C-suite within it were split 50-50 across genders, women would still only commit 28.12 percent of the expense report misconduct. Accordingly, the “lack of women in positions of power hypothesis” can also be scratched.
The large disparity may just come down to gender differences in risk-taking behavior. In a 2004 experiment, researchers designed a computer game involving gambling and risk and found significant differences in the way men and women perceived probabilities and the outcomes of their actions. The men in the study took greater risks than women did, especially when there were larger rewards. Women took fewer risks and showed a stronger aversion to losses. It’s possible that this difference in perceived risk impacts the workplace as well, and women are less likely to fudge their expenses as a result.
Combatting expense report misuse and fraud isn’t easy, but solutions like AppZen can help. For example, an employee might submit an expense in February and then (accidentally or not) submit it again the following month. An accountant may not notice (or add to her already time-consuming review process to go back and check all previously-approved expense reports); however, using machine learning and natural language processing, an automated auditing platform can cross-reference every available report and line item in seconds, flagging likely instances of fraud. In this case, the AI of a platform such as AppZen would mark the second report as a duplicate, alerting the human auditor to double-check before the employee is reimbursed.
Make sure your HR or accounting departments consider the potential benefits of an automated expense auditing solution—it could save your organization millions in travel and entertainment spend every year.cues icon
Josephine McCann is a senior marketing associate at AppZen, San Jose, California, which offers an automated solution for expense report audits that leverages artificial intelligence to audit 100 percent of expense reports, invoices and contacts in seconds.