42% of public sector decision makers have submitted fraudulent expense claims, study finds

SAP Concur research finds that the public sector is under threat from expense fraud, technical debt, and an impending talent crisis

London, November 1^st, 2022 – The UK public sector is struggling to get to grips with expense fraud, according to a new SAP Concur survey of 500 public sector decision makers across the UK. The research finds that half of UK public sector decision (42%) makers surveyed admit to having submitted a fraudulent expense claim. This is not due to a lack of knowledge, as 81% understand what would count as fraud and 84% appreciate the risks of being associated with a fraudulent claim.

The report highlights that many public sector organisations are struggling to tackle fraud due to a combination of technology and processes. Only two thirds of decision makers (66%) surveyed have ever seen their organisation act against an employee that has submitted a fraudulent claim, whilst less than one in two public sector organisations (45%) provide fraud awareness and prevention training for employees. Archaic expense processes, technical debt, and the impending talent crisis are also all putting a strain on a public sector that is already under pressure.

Expense Fraud in the UK Public Sector: The Cultural and Technical Costs

Discover the impact of fraud on the public sector’s culture and talent retention.

Read Report

Archaic expense processes

It is clear that public sector organisations mostly rely on manual expense processes, which have not been significantly updated since the pandemic – making it more difficult for finance teams to identify mistakes, falsified claims and long-term patterns of fraud. The research finds that 37% of public sector bodies surveyed rely on manual spot checks to reduce expense claim fraud, with just one third using automated expense management. This is having a real impact on the sector, with 28% of decision makers stating that expense process not being digitalised as one of their organisation’s biggest barriers to closely monitoring expense fraud, making it harder to audit.

On top of this, the majority of public sector organisations surveyed are failing to update their expense policies on a regular basis. The research shows only a quarter (25%) updating their policies as a result of the pandemic and the shift to hybrid working, whilst just over a quarter (26%) have implemented more stringent checks and/or audit processes since the pandemic.

Technical debt hampers transformation

For many years, technology has been seen as an important way for the public sector to evolve. Decision makers highlight both rapidly changing employee expectations (24%) and rapidly changing citizen expectations (21%) as key threats to their organisations – and technology can be a key enabler for organisations to become more efficient and develop new services as the UK changes. This is understood by public sector organisations, with eight in ten decision makers (78%) agreeing that digital technology is highly important to their organisation.

Technology is clearly very important to public sector organisations and much progress has been made. Three quarters (76%) of decision makers say they have made progress with digital transformation plans, while 68% believe their organisation is ready for the future. Despite this, many public sector organisations are being hindered by outdated processes and technical debt. Over six in ten decision makers (62%) say outdated processes and technology are holding their organisation back.

An impending talent crisis

Employees are critical to the delivery of public services in the UK. But with the impact of the pandemic and the current cost of living crisis, many people are considering leaving public sector roles – with significant consequences for their organisations. Decision makers estimate that an average of 20.5% of their workforce leaves for the private sector each year – and 61% view this turnover as a key concern. In fact, 31% of decision makers believe talent shortages are the biggest threat to their organisation.

There are many reasons behind this. Financial concerns are important; 53% of decision makers cite better pay as the top reason for employees leaving their organisation for the private sector. But there are also signs that people are dissatisfied with their working lives in the public sector. Leaders highlight the need for less stress (27%), more innovation (18%) and more digital tools (14%) as further reasons for employees leaving for the private sector. These needs are so important that one in four (24%) decision makers view rapidly changing employee expectations as a threat to their organisation.

Matt Clementson, Head of Enterprise UK at SAP Concur, explains:

“These results show that expense fraud continues to be a problem for public sector organisations, with the level of fraud surprisingly high, even amongst senior decision makers. Organisations within the sector are failing to take the problem seriously, with minimal efforts to counter fraud and a lack of technology to effectively monitor the situation. This cannot go on. Expense fraud has a damaging impact on the resources and reputation of public bodies. It is time to take the problem seriously and invest in tools that will help tackle expense fraud. Automation and technologies such as artificial intelligence provide a great way to do this but must also be combined with regularly updated expense policies.

On top of this, the public sector needs to ensure it is adopting a holistic approach to digital transformation. The findings show that despite much progress being made on digital transformation, some core processes are still being overlooked. Technical debt and archaic systems make it more difficult for organisations to adapt to new ways of working, such as hybrid working. Investing in technology and enabling innovation will be absolutely vital in facing off the upcoming talent crisis. Younger employees want access to the latest technology and the ability to work remotely – public sector organisations must recognise and respond to these needs. A more holistic approach to digital transformation will provide greater benefits for employees’ working lives, improving retention at a crucial time.”