AI audit tools set to cut 14% overpayment in expense claims

New analysis of employee expense claims indicates that companies are overpaying by as much as 14% due to non-compliance, both accidental and intentional. The figures reflect inefficiencies in manual expense management that continue to impact organisations' costs and audit preparedness.

Scale of overpayments

The data, based on over 10 million expense submissions via Rydoo's Smart Audit platform, shows that 86% of claims are compliant with internal policies. However, 14% fall outside of these parameters. This discrepancy can inflate operating costs and expose companies to additional audit risk. There are also implications for VAT recovery, as non-compliant claims may not be recoverable under tax rules.

Manual review burden

The process of identifying non-compliant expenses is time-consuming. For mid-sized businesses with approximately 650 employees, around 2,300 hours per year are reportedly spent manually reviewing expense claims. Human review can fail to detect repeated patterns or fraudulent behaviour, potentially allowing more non-compliant claims to go unnoticed and paid out.

Fraud and automation trends

There is growing evidence of new types of fraud. About 1% of expenses assessed show signs of being generated by artificial intelligence, a trend that is anticipated to accelerate. Systems capable of detecting AI-generated content in claims are seen as increasingly important as these techniques evolve.

AI efficiency advantage

Automated approaches with embedded AI are being implemented to address these challenges. AI-driven solutions can assess 100% of claims in real time and, according to figures released, do so with 97% accuracy. This level of automation also allows finance teams to focus attention on those claims flagged as potentially non-compliant, rather than spending excessive time on compliant expenses.

"Advanced AI audit solutions can close control gaps by enabling finance teams to automatically review every claim in real-time and apply policy consistently, while maintaining human oversight where it adds value. With meaningful time and cost saving benefits, companies that fail to embrace technology in expense management will fall behind. And, with 30% of expense fraud set to be AI-generated in the coming years, fake or fabricated expenses are going to become common place amongst certain employees looking to exploit their finance departments. Companies will need to work even harder to ensure they've got the right technology in place to catch non-compliant expenses that could impact their bottom line." said Sebastien Marchon, CEO, Rydoo.

New directions in audit

Next-generation audit solutions are shifting from rule-based analyses to approaches that can learn from emerging fraud and compliance patterns. These systems have the potential to recommend new controls and guide users during the submission process, responding dynamically to changes in staff behaviour and policy complexity.

"We're moving on from AI that follows rules to AI that helps redesign them. The next generation of expense audit systems won't just flag exceptions but learn from patterns, suggest smarter controls, and guide users in real time. That's how finance evolves from oversight to intelligent governance," said Sebastiaan Vanhecke, Chief Product Officer, Rydoo.