Expense fraud rarely announces itself. It appears as small, reasonable transactions that pass review every day: a meal just under the limit, a receipt that looks legitimate, an approval completed in seconds.
On their own, none of these raise alarms, especially when each transaction sits comfortably within policy limits. But when spend is monitored as a system instead of isolated approvals, fraud and waste reveal themselves through patterns.
This is where intelligent compliance comes in.
Powered by Emburse AI, intelligent compliance is Emburse’s approach to managing fraud and waste as a continuous system rather than a one-time checkpoint.
Emburse Assurance delivers compliance across every step of the expense process. It helps prevent errors and out-of-policy spend before expenses are submitted, then continues evaluating submitted expenses for potential fraud or misuse.
When an expense requires a second layer of review, teams can either review it internally or engage an independent team of Emburse Audit reviewers to apply human-led analysis and judgment before payment.
Below are the most common fraud and waste red flags—and how intelligent compliance brings them into focus before losses add up.
Red flag #1: Duplicate expenses
Duplicate expenses are one of the easiest ways money leaks out—and one of the hardest to stop—because they rarely appear as obvious copy-paste errors.
Most expense systems only examine data extracted from receipts and rely on exact-match rules, such as category, merchant, date, and amount, to identify duplicates. This approach fails when a simple change is made, such as being submitted under different categories or by multiple users, allowing duplicate reimbursements to slip through.
Why traditional audits miss it
Manual review can confirm whether a single expense is valid. It struggles to answer a more important question: Have we already paid for this?
Reviewers rarely have the context to confirm whether a charge has been reimbursed elsewhere. Sampling reduces workload, but it also guarantees blind spots when duplication is spread across time, reports, or employees.
How intelligent compliance detects and prevents it
AI is well-suited for duplicate detection because it can examine the receipt image and analyze activity across the system to identify duplication risk.
Even if the same receipt is submitted under different categories, such as Client Entertainment by one employee and Dinner by another, and captured with different backgrounds, Emburse Assurance can identify shared details within the receipt image, such as a ticket number, and flag it.
Analytics dashboards then aggregate that activity, revealing repeat duplication by employee or department. Finance teams gain visibility into where risk repeats, so they can fix the root cause instead of chasing individual claims.
Red flag #2: Fake or altered receipts
Fake receipts no longer look fake. AI-generated images can replicate fonts, layouts, and merchant branding with convincing accuracy, even if the employee has never transacted with that vendor.
In other cases, legitimate receipts are subtly altered: a total adjusted upward, a date shifted, a line item edited or removed. Each version appears across separate submissions over time, even though the underlying receipt is effectively the same.
Why traditional audits miss it
Traditional audits ask humans to do what software now does better: judge images at scale. Auditors review receipts quickly, relying on visual cues and common sense. That works until submission volume explodes and synthetic images become indistinguishable from legitimate ones.
How intelligent compliance detects and prevents it
Emburse AI reviews the attached receipts to validate structure, consistency, and integrity, identifying signs of manipulation that aren’t visible to the human eye. When something doesn’t add up, anomaly detection flags the expense and routes it to expert reviewers for investigation.
This layered defense combines automated detection with human judgment, allowing teams to catch manipulated receipts without turning audit into a bottleneck.
Red flag #3: Personal spend disguised as business
Does an expense comply with policy? Is a receipt attached? Is the amount reasonable? If the answers are yes, the claim usually clears review.
That’s how personal spend slips through. Not as blatant violations, but as edge cases that feel acceptable in the moment—submitted outside regular working hours, in technically allowed categories, with just enough explanation to satisfy policy—even when they don’t fully align with how, when, or why work is happening.
Why traditional audits miss it
Personal spend hides behind interpretation, sitting in gray areas where intent is hard to prove. Policies are written to allow flexibility, not to litigate every scenario, and interpretation varies by approver once context disappears after submission.
Under time pressure, approval becomes a formality, allowing the same edge cases to pass repeatedly while the underlying behavior remains unexamined.
For example, traditional audits would check whether a receipt is attached or whether a $100 gas charge falls within policy. If it ticks all the boxes, that expense would usually be approved without a second thought. But what they miss is the context inside the receipt. A closer look might reveal the employee also purchased a teddy bear as a gift while filling up—something that clearly doesn’t qualify as fuel.
How intelligent compliance detects and prevents it
Using AI, Emburse Assurance reviews the entire receipt, understands the merchant's context as a gas station, recognizes the expense is submitted as fuel, and flags that the teddy bear doesn’t align with the spend category.
This level of intelligence, interpreting item-level details and understanding context, not just totals and limits, is what makes AI-powered compliance so valuable. It catches what rules can’t, surfaces real issues, and gives finance teams confidence in what looks compliant on the surface.
When a submission triggers review, Emburse Assurance assigns risk scoring to help finance teams determine which exceptions to prioritize. Over time, behavioral analysis highlights recurring patterns, enabling audit teams to focus on high-risk categories.
Red flag #4: Policy confusion that looks like fraud
Fraud deserves attention. But focusing only on fraud can hide a larger, more common problem: waste resulting from policy confusion.
According to the Association of Certified Fraud Examiners (ACFE), 85% of rejected expense reports stem from policy or data entry errors. From the outside, the volume looks like an elevated risk. Within finance teams, it manifests as friction: endless clarification emails, resubmissions, and mounting frustration.
Why traditional audits miss it
Every exception enters the same review queue, regardless of intent. Audit teams spend hours correcting mistakes instead of focusing on true risk, while employees experience rejection and are forced to spend time redoing reports. Approvers are left enforcing unclear rules, pulled into a “bad cop” role that slows workflows and erodes trust.
How intelligent compliance detects and prevents it
Emburse Assurance addresses this by making compliance easier to follow upfront. Proactive alerts provide timely reminders throughout a business trip—notifying employees when they’ve submitted an incorrect receipt type to ensure they request the right one.
As expenses are created, pre-submission guidance applies configured rules in real time—tailored by region, role, department, or policy nuance—so expectations are clear in context. Intelligent OCR further reduces friction by automatically capturing and categorizing receipt details, including handwritten text, to minimize manual entry and reduce first-pass errors.
Behind the scenes, analytics reveal where confusion persists, helping finance teams refine policies and training, rather than managing rework downstream.
Moving From Reaction to Prevention
Every red flag in this list points to the same problem: timing.
Fraud and waste emerge when signals arrive too late. Risk hides inside legitimate-looking activity. Waste builds through confusion. And manual processes struggle to separate the two.
The answer isn’t more review; it’s to stop leakage before it happens. By guiding behavior earlier, applying context in the moment, and using patterns instead of hindsight, finance teams can prevent both fraud and waste before they reach audit.
Download our whitepaper, Fraud and Waste Prevention in an AI-Enabled Spend Landscape, to see how leading organizations are moving beyond pay-and-chase towards intelligent compliance that scales with modern spend.
Looking to explore these ideas further? Sign up for our “Expense Fraud Red Flags & Prevention Tactics CFOs Must Know” on-demand webinar to see how these principles play out across real expense workflows.