One of your employees pads his mileage on reimbursement forms. Another conveniently loses a receipt for a less-expensive meal so she can claim the $25 maximum reimbursement. For most companies, this kind of petty theft is no big deal. If the amounts lost are small, it might seem easier to ignore the problem than to investigate, but expense report fraud can have large indirect consequences.
If your employees are willing to commit expense report theft, they might be open to committing more serious fraud against the company, according to an article on AllBusiness.com by forensic accountant Tracy L. Coenen.
“Imagine a highly compensated executive cheating on expense reports to steal $10 here and $12 there,” Coenen says. It might sound strange, but it happens. “It wouldn’t be unthinkable for that executive to be stealing in other areas of the company, and the expense report theft is simply consistent with the executive’s attitude toward the organization’s money,” she adds.
A lax reporting system may tempt employees, causing them to wonder what other theft and fraud could be overlooked. This situation asks employees to independently determine how much dishonesty will be tolerated. That’s a potentially damaging situation for all concerned.
While verifying expense reporting may seem insignificant — as well as tedious and time-consuming for all involved — companies protect themselves from more serious fraud by setting clear expectations in an expense policy. Companies should understand that enforcement is critical. The benefits of rooting out expense fraud will only come if you have commitment and means to ensure enforcement.
Additional examples of expense report fraud, according to the AllBusiness.com article, might include the following.
- Submitting personal items and other ineligible expenses for reimbursement.
- Inflating legitimate costs or claiming “cash” expenses to avoid producing receipts.
- Exceeding limits for allowable expenses, perhaps by splitting one expense into several items.
- Double-billing by using a company credit card and later submitting the receipt for cash reimbursement.
By demanding honesty in little things like expense reporting, companies can help set the ethical tone for the workplace and employees. How do you set the tone for ethical behavior in your company?
- A Case Study: CSG International Saves 20–40 Hours Per Month After Switching Over
- The Future of Travel Part 2: Five Predictions for Post-Covid Business Travel And Expense Management
- The Future of Travel Part 1: Five Findings That Prove Business Travel is Here to Stay
- Elsevier: Overcoming Global Finance Complexities
- Why Mobility is a Critical Consideration for Your Expense Management Strategy
Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.