Cloud Computing and Anti-Bribery Laws

Transcription

1 Applying Cloud Computing to Policy and Control

2 Applying Cloud Computing to Policy and Control 2 Introduction Britain s recent enactment of the toughest anti-bribery laws in the world, has thrust the management of business employee expenditure even further into the legal spotlight. The persistent threat of a double-dip recession and a tottering euro-zone will push the need to reduce business s second largest controllable cost to the forefront of the business mind. The days when businesses could put their faith in employee honesty are fast fading as society takes its moral lead from those at the top. Years of political expenses scandals and perceived corruption in the banking sector have set a dangerous moral precedent, triggering dramatic changes in the culture surrounding corporate expenditure. Studies show that most employees now have no qualms about committing expenses fraud and that many do not trust their own managers to behave ethically. Recent trends towards worker empowerment, workforce mobility and the increasing use of personal consumer-it devices to perform corporate duties, meanwhile, have rendered the task of in-house expenses-management yet more difficult. And this is at a time when business is striving as never before to reduce admin costs.

3 Applying Cloud Computing to Policy and Control 3 Finance Departments need the tenacity and the right tools to take control of the situation. They need to be responsive to legislatory change and less reliant on employee behaviour - only through taking control of the situation will they be able to avert the escalating legal risks and mounting costs associated with policy compliance. What s changed? Britain s recent introduction of the toughest anti-corruption legislation on the planet and a major clampdown on tax evasion should compel business to place stringent expenses-management at the heart of the corporate agenda. The threat of limitless fines and 10-year jail terms for corporate Directors has transformed expensesmanagement from a cost-cutting exercise to a legal imperative. Policy Tax Liability The scale of Britain s national deficit has prompted a major HMRC clampdown on tax evasion, to close a 42 billion tax gap. HMRC has been equipped with a 900 million budget to pursue companies for false expenses claims, and common employee practices such as rounding up trips, are now a priority target.

4 Applying Cloud Computing to Policy and Control 4 HMRC says that employers should have appropriate systems in place to verify that any business mileage claims made by their employees can be paid free of tax. Should such claims turn out to be false, both the employer and employee may be liable to action taken by HMRC. HMRC s focus is on encouraging corporate responsibility for expenses management, by holding employers liable for the actions of employees. But, the legislation also includes a crucial loophole for victims of employee expenses fraud, as long as the company can show they had appropriate systems in place. Anti bribery Act The Bribery Act blurs the line between legal and illegal corporate hospitality by defining bribery as a financial or other advantage offered and incorporates three specific corporate offences: bribing any person to induce or reward them to perform a relevant function improperly: bribing a foreign official to gain a business advantage and the failure to prevent bribery. The Act also widens the Serious Fraud Office s (SFO) punitive scope to include fore ign businesses deemed to have any business connection with the UK, including a listing on

5 Applying Cloud Computing to Policy and Control 5 the London Stock Exchange. Company Directors can even held liable for the actions of business associates or subsidiaries. If businesses are to avoid harmful prosecutions they will need to fully exploit a crucial loophole in the legislation: the introduction of a defence for the failure to prevent bribery if the organisation had adequate procedures in place. Businesses can avoid any risk of prosecution for improper corporate hospitality, as long as they have procedures adequate to abide by five key SFO criteria: the company has a clear issued policy regarding gifts and hospitality: the amount of employee expenditure is within policy limits and any claims that exceed the limit are referred to a high level within the organisation: the expenditure was proportionate : the company has evidence that all employee expenditure was recorded, and the recipient was entitled to receive the hospitality under the relevant legal jurisdiction. Company Policy Businesses need the flexibility to ensure expenses policies can be tailor-made for sector-specific issues. Publicly-funded bodies, which are uniquely sensitive to reputational damage, and must justify every penny of taxpayers money they spend,

6 Applying Cloud Computing to Policy and Control 6 must have the ability to rigorously enforce expenses policies aligned with the lofty principles of the Nolan Committee on Standards in Public Life. It is also imperative that they have the flexibility to record and immediately retrieve a full archive of expenses claims, on-demand, in response to frequent Freedom of Information requests from members of the public. Organisations attempting to reduce collective C02 emissions as part of a CSR initiative, or new emissions targets, will need to reliably record and reduce the impact of their annual Travel & Entertainment on the corporate carbon footprint. Industry-specific issues, such as the banking crisis, mean that private companies must be able to adapt their policies to changing expectations and the need for new codes of practice, governing financial ethics. Pharmaceutical companies, under pressure after revelations of inappropriate hospitality to NHS doctors, need to be able to adapt to the rapidly-changing ethical codes of the Association of the British Pharmaceutical Industry, which govern how much information they must declare and what degree of hospitality is appropriate.

7 Applying Cloud Computing to Policy and Control 7 Business Trends Seismic shifts in the nature of business travel and the global regulatory environment offer both threats and opportunities for corporate Finance Departments. The rise of the I worker This year, Gartner predicts 80% of the enterprise workforce will soon be mobile and the implications of this for 21st century expenses-management, are wide-ranging. Increasing workforce mobility and worker empowerment are being fed by legislation emphasising work/life balance and the increasing consumerisation of IT. Employees now expect not only to be able to work and access corporate data on personal devices but to be able to shop around online for the best T&E deals. An increasingly mobile workforce means claims are splintered among multiple sources, making the money trail harder to follow. Businesses can no longer take a paper-based or PC-centric approach to expensesmanagement, but must operate systems that can capture claims and receipts across the modern array of personal devices.

8 Applying Cloud Computing to Policy and Control 8 Globalisation The increasing internationalisation of the modern workforce means that businesses must be able to rapidly adapt to a wide range of changing regulations and make it easier for line-managers in one country to swiftly verify and approve claims made in a different currency, under different rules, in a foreign subsidiary of the company. For businesses that are capable of Award Winning Expenses Software making the necessary adaptations, more international travel brings more opportunities to take advantage of discounts for company loyalty to specific travel companies, and favourable VAT rates on business travel. A Changing Culture A YouGov poll found that one in five people think it is acceptable to inflate or falsify expense claims, vividly illustrating the scale of the recent change in the moral climate around honesty in financial dealings. A number of factors have precipitated this trend: employees tend to take their moral lead from those at the top and studies show that one in four workers no longer trust their managers to behave ethically with expenses: many employees believe the rules are inconsistently enforced which makes them less likely to comply: honest employees

9 Applying Cloud Computing to Policy and Control 9 may feel their honesty is no longer rewarded or even noticed because the procedures for monitoring employee expenditure are becoming so lax. Businesses need to find new ways of ensuring employees abide by the rules. If employees trust the system to treat everyone fairly, identify wrongdoing and reward honesty they are far more likely to co-operate with the rules. Cloud Computing: Compliance and Control Modern cloud-computing software empowers Finance Directors to reduce T&E costs with greater flexibility in the fast and ever changing business environment, whilst reducing corporate vulnerability to human error and fraud. It is prohibitively expensive for in-house teams to monitor, record and check a global expenses trail across myriad payment methods, currencies, fluctuating exchange rates and regulatory frameworks. Outsourcing to software-as-a-service models reduces an organisation s dependency on employees, by offloading the number-crunching and data storage into the cloud.

10 Applying Cloud Computing to Policy and Control 10 Easy Implementation - Laws with international scope, like the UK Bribery Act, can be centrally incorporated into one online policy framework, then pushed out to all employees, through a rigid and audit-able process which automatically factors in varying currencies and exchange rates and checks claims for compliance against international tax rates and regulations. Improved Compliance Claims and evidence are remotely captured, recorded and assessed for compliance, employees are instantly notified if a claim is non-compliant before it is entered, and excessive claims are instantly re-routed to Head Office, automatically fulfilling all the criteria of the toughest bribery legislation in the world today as well as your own business policy guidelines. Automated software encourages voluntary employee compliance: it makes the system fair and transparent, by taking human subjectivity out of the process of policy enforcement, checking all claims for compliance from the CEO to the admin team and rapidly reimbursing genuine claimants.

11 Applying Cloud Computing to Policy and Control 11 Policy Enforcement Storing claims details online, where they can be viewed in real-time from remote locations, helps organisations identify and reward honest and frugal employees and punish individual extravagance and non-compliance, by allowing organisations to compare spending patterns between individuals and Departments. Point of Entry reminders and configurable rules ensure that only expenses that meet company policies can be submitted. Claims Verification Software-as-a-service allows businesses to identify where they can claw back VAT on travel, and where they are in breach of HMRC rules, because GPS tracking uses postcode data to provide precise distance calculations for every business journey, while the software then works out how much of the journey is taxable. Person- centric - Modern i-workers Accustomed to technology built around ease-of-use, will not tolerate rigid expenses systems that make it hard to choose the best travel deals or submit claims on the move. Businesses can turn the trend for worker-empowering consumer-it to their advantage, by making it easier for employees to book T&E and submit claims and evidence on the road. Claims can be made and checked swiftly through smart-phone

12 Applying Cloud Computing to Policy and Control 12 apps, integrating with phone cameras to capture electronic receipts. This removes any excuse for losing evidence or adding on late extras and helps remote Finance Departments keep track of expenditure, even while global employees are on the move. Bullet proof audit trail Because the data is instantly uploaded to the cloud, companies can see complete records of spending patterns and spot opportunities for discounts on volume bookings with the same airline or hotel chain. Special features allow companies to pre-book and approve trips online in advance, avoiding the risk of unbundled travel deals with hidden extras, and ensuring every aspect of the journey is policy-compliant. The software populates directly from company cards, so the spending patterns of cardholders are instantly viewable. Flexibility Everybody talks about the advantages of cloud technology when it comes to cost savings and scalable data storage: but its advantages when it comes to the ability to quickly respond to, and incorporate changes in the global economic and legal environment, are rarely discussed.

13 Applying Cloud Computing to Policy and Control 13 Companies using software-as-a-service can customise their expenses and payrollmanagement for international divisions and tiers of employees across a vast range of currencies, policies and rules. The flexible systems can be configured to incorporate an endlessly changing stream of laws and rules governing each company division and each tier of employee in its calculations. This gives Finance Departments an instant and accurate overview of spending patterns across a fragmented global operation. Working Towards A New Model Of Financial- Governance An unprecedented Government crackdown on corruption, combined with the increasing impact of expenses fraud on the bottom line, will compel the private sector to adopt a radical new model of ethical financial governance. By introducing a new offence of failing to prevent bribery the Bribery Act moves responsibility for all expenses fraud directly to the top, placing a new obligation on Directors to lead the transformation in how employee transactions are governed. The increased punitive power and reach which the Bribery Act gives to the Serious Fraud Office will compel organisations to overhaul the way they capture, check and record all employee expenditure to generate an up-todate, bullet-proof audit trail.

14 Applying Cloud Computing to Policy and Control 14 Companies will need the flexibility to respond to a highly-unpredictable regulatory environment and keep a globally-dispersed workforce informed of the rules. At a time when legislation is growing tougher, the process of compliance is growing ever more complex. A revolution in consumer IT means most modern employees are now armed with personalised devices, triggering a new era of worker empowerment, and greatly-increased workforce mobility. This will render the process of capturing receipts ever more complex, as employees claim for expenses on the move, across different currencies, using different devices and different payment methods. Businesses can either recoil from this new trend, or embrace it, by empowering employees to book their T&E and upload the resulting claims and evidence on the go, thus simultaneously empowering business to capture and check claims at the entry stage. The future is a person-centric approach to expenses, whereby claims and bookings sourced to personal devices, will enable companies to swiftly identify, reimburse and reward the most honest employees. Conversely, excessive or fraudulent claimants will be more easily spotted and monitored. This automated system, which treats the

15 Applying Cloud Computing to Policy and Control 15 Director the same as the admin team, will see expenses-management play a greater role in the HR function, incubating a culture of fairness and transparency which encourages voluntary compliance. Software-as-a-service models will give companies a live portal into global employee expenditure, enabling them to identify the best opportunities for savings through bulk discounts or VAT rebates. With software that tracks the employee carbon footprint alongside the money trail, companies will soon begin using using pre-trip approval not just to find low-cost journeys and comply with Government expenses rules, but to plan low-carbon Travel & Entertainment that complies with Government emissions targets. A post-recession drive for savings, combined with tougher anti-corruption laws, billions lost due to expenses fraud or unclaimed VAT, will see greater numbers of businesses turn to outsourcing as a means of guaranteeing regulatory compliance, while cutting the admin costs and the risk of human error.

16 Applying Cloud Computing to Policy and Control 16 About Webexpenses Webexpenses is a provider of award winning web-based expenses management solutions. The software allows for unparalleled flexibility in configuration and ease of use, allowing organisations to quickly reduce travel and entertainment spending and the costs of processing expense claims. From the very start, webexpenses has had one main objective - to make expenses something you effortlessly control; not a costly drudge you battle against. It is an approach which has fuelled webexpenses growth over the past decade; it s now the tried and tested solution for hundreds of clients throughout the world - from small organisations to large multi-nationals. By giving organisations the tools to control expenditures, webexpenses clients are able to increase efficiency, stabilise T&E spending and reduce operational costs; providing a speedy return on their investment.

17 Applying Cloud Computing to Policy and Control 17 Exceeding Expectations The foundation of webexpenses success has always been its powerful and robust software solution. But at the heart of the company is a commitment to exceed expectations - to go that bit further to ensure our clients needs are met. Each and every one of our users, no matter how large or small the organisation, is given the same level of personal service from our client support team. This commitment has allowed webexpenses to record some of the industry s highest ratings for customer support and a 97 percent client retention rate over the past five years. Next Step For more information on how we could help you implement a robust policy, just contact us. Call: +44 (0) [email protected]

18 Applying Cloud Computing to Policy and Control 18 Web: Twitter: Linkedin: Please Note: The information contained in this document is accurate at the time of publishing and is meant as guidance only. We would advise that for any specific information you seek advice from a professional body or adviser, in particularly to stay up to date on all legislative changes.