Specific Prevention of Expense Fraud: Some Options

Theft from inside an organization may be mitigated if strict controls are put in place, offenders are dealt with harshly, and management sets a good example. Expense reimbursement scams may affect any organization, whether you’re a multinational conglomerate or a little nonprofit with a few employees.

Con artist Conspiracies

Workers requesting reimbursement for fictitious expenses and firms overstating their actual costs are the two most common types of scams. The following are some instances of bogus costs that have been discovered on expense reports:

  • Costing oneself more for using a product one already owns (gas, groceries, hotels, etc.)
  • Charging for services not rendered or expenses not incurred (canceled airline tickets, seminar or convention registration fees, tuition reimbursement and professional dues payments)
  • Claiming to have purchased something but wanting to be reimbursed (office supplies, gifts for clients)
  • Conspiracy between employees who travelled together but filed separate claims for mileage or travel reimbursement.
  • Making blatant changes to the receipts or passing them off as legitimate.

Employees may increase a company’s expenses in a number of ways, some of which are listed below. For example, if you have spent more than the allotted amount on meals and entertainment, or if you have purchased an item that is not covered by your policy’s reimbursement provisions, you may make a claim for reimbursement (alcohol, leisure activities, sports tickets).

  • Even if gratuities were already included into the original cost estimate, they should be added for the purpose of reimbursement.
  • Tips in excess of what was really left over should be included in the employee’s reimbursement paperwork.
  • It’s inefficient to take a first-class flight or hire a limo service when more cost-effective alternatives exist.
  • Round up your mileage totals to maximise the probability of being reimbursed for your car travel expenditures.
  • Keeping workers honest and avoiding the financial damage that might result from fake expense reports is not difficult. Establish reliable internal controls as a first step.

Control this by establishing a policy or criterion for trip reimbursement. Conspicuous prohibitions and reasonable daily allowances should be spelled out in the policy and communicated to employees on a regular basis. For expense fraud it works fine.

Call for the original documents to be attached to the reports or filed away for a certain length of time so that they may be accessible during an audit.

Formal Review

Start a formal review process where a department manager or other person with equivalent responsibility reads over the reports given by employees. The payroll or human resources division should also do a short review.

Any out-of-the-ordinary or unusual expenditures should be properly researched. In the long run, it will be more challenging and costly to solve the problem if you wait for it to worsen. Check with the accounts payable or payroll divisions to ensure correct payment processing. Workers shouldn’t be paid in advance if there’s any way to prevent it. Utilize corporate charge cards to increase your degree of control. Whether a company uses corporate cards for transactions, it may check the status of each card and see if any charges have been made.


The company that issued your business credit card will provide you with a monthly statement detailing your account activities. You may use these reports to get an idea of how many payments are being cancelled or reimbursed to which accounts. To check whether this is being reported correctly, one option is against compare it to reports of actual expenditures.

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