Customizing T&E for China
Genpact believes that to build a robust T&E compliance program in China, you must account for the country's distinctive compliance and business challenges. To effectively manage the risks and challenges highlighted above, you must take the following steps:
1. Review current processes and policies: You should clearly define end-to-end controls for the T&E expense submission and review process. While doing so, you must consider local nuances and yet stay true to your organization's ethical standards. You can do this by developing a China-specific policy addendum that is consistent with your global T&E policy. This should include adequate controls and approval requirements and thresholds, as well as a shift toward digital.
2. Promote the use of expense management systems: Train employees to use a digital expense management system for submitting expenses. Built-in automated controls in this system should define mandatory details to submit across different expense types and require soft copies of fapiao, invoices, and other supporting documents for all expense items.
3. Deploy digital technology: The high volume of transactions at global companies makes it nearly impossible for them to manage T&E compliance manually. You can enhance risk coverage across fraud and regulatory noncompliance by augmenting manual audits with technology. And save money doing so. This calls for a comprehensive compliance framework with a combination of customized technology, processes, and a trained team. This typically involves:
- Leveraging optical character recognition (OCR), AI, and machine learning technology to perform a 100% expense review before approving expense reports (OCR technology will enable validation of itemized receipts)
- Checking for and flagging duplicate and incorrect invoices
- Flagging any high-risk attendees and third parties
- Keyword searches to identify and flag unallowable and high-risk expenses
- Built-in checks to catch fake fapiao by verifying with the Golden Tax website
4. Leverage domain experts: Identify or recruit team members who have a deep knowledge of global as well as Chinese bribery and corruption regulations. These experts can help conduct in-depth reviews and substantive testing for high-risk expenses identified by digital technology.
5. Conduct post-payment reviews: Though we recommend that digital solutions enable AI-based pre-payment review of 100% of expenses within minutes of submission, this should complement post-payment analytics for comprehensive fraud and regulatory coverage and trend analysis for high-risk expenses such as government expenses, gifts, and repeat offenders.
6. Periodic analytics-based reviews of current and historical expense data: This will help you to:
- Monitor for risks such as incorrect, duplicate, or invalid fapiao by running invoice sequence number checks to identify potential fraud by submitting multiple invoices with similar invoice numbers
- Find unusual behavior or noncompliance trends for repeat offenders
- Flag duplicate and repetitive expenses
7. Enable near-real-time reporting: Customized, intuitive dashboards can give leadership teams end-to-end visibility on key health parameters and bolster compliance behavior.
8. Conduct root-cause analysis of noncompliant transactions: This can help identify key risks and enable enterprises to take corrective measures in the form of policy, process, and system enhancements, improved regulatory coverage, training, and investigative reviews to continually improve compliance health.