It could take the form of physically altering receipts and invoices, or it could be a case of trading in first-class airline tickets for two coach tickets and bringing a companion along for the ride instead of traveling alone. No matter what form it comes in (expensing fictitious charges or inflating actual expenses) expense report fraud is on the rise.
While there are no hard numbers to connect to annual corporate financial losses due to company fraud in North America, the New York Times reported last month that estimates have climbed into the billions. According to the Association of Certified Fraud Examiners, a typical company loses approximately 5 percent of its annual revenues to occupational fraud and 15 percent of that figure comes from expense fraud.
Here are three tips that should help you prevent company fraud expense:
1. Clearly Define Your Travel and Expense Policies
Policy is at the heart of any managed travel program. The ability to communicate that policy and educate travelers about the behaviors that are required for responsible travel and expense reporting should be a priority. Travel managers must understand the role of travel policy in successful expense management efforts.
Clear enforcement of policy is also required. When individuals see others get away with inflating taxi receipts or other common expense infractions, they can be emboldened to do the same.
2. Set the Tone at the Top
Travel and expense policies apply to all employees when expense fraud is a central corporate concern. If senior executives have carte blanche to spend lavish amounts on T&E – or if they feel free to flout travel and expense policies – that cavalier attitude is likely to trickle down to other employees.
3. Require Receipts for All Expenses
In an effort to streamline the expense reporting process, some companies have put a minimum expense threshold on their receipt requirements. For example, any expense under $25 does not need supporting documentation when filing an expense report. While this does make the expense process easier in many ways, it can lead to company fraud: a few fictitious $25 charges can be easily included in an expense report.
Whatever form the fraudulent expense reporting may take, travel and expense managers need to understand the impact that fraud has on their company. These tips should help you prevent problems before they start and identify fraudulent expense reporting that may already be underway.