Help prevent fraud with better expense reports

Every day, the headlines provide shocking reminders of the high cost to businesses of poor visibility. What SMB can survive a million dollar loss?  


Scary Story

To any savvy businessperson, the August 25th article in the Minneapolis Star-Tribune is scary: “Medical device employee allegedly stole $682K, bought trips and silver bullion.” The woman who is the suspect was the bookkeeper/controller of the company. The Star-Tribune goes on to say that: “Prosecutors suspect she actually stole closer to $900,000 over seven years, but the five-year statute of limitations ran out on some of the alleged thefts.” That’s almost a million dollar hit, enough to sink a lot of SMBs.  


Court documents: It didn’t take long to start

Hennepin County, Minnesota court papers posted online say “this theft started in June 2008, just six months after she started at the company and began as small purchases at a service station near her home. Her use of the company credit card escalated as time went on.” The court complaint says that “In December, 2011, for example, she spent $6,500 on the company credit card for hotel rooms via” Prosecutors allege that the suspect “…made purchases at online retailers, clothing stores, home improvement stores, jewelry stores and other locations.”  


Big Money

If it started small, prosecutors describe theft that got bigger and bigger. The criminal charges say “The largest single fraudulent purchase on the credit card came in March 2013, when she put $24,588.06 on the company credit card to pay for a vacation for herself and her mother.” She is also suspected of manipulating her paychecks and making improper company payments to herself and to a business she co-owned. The court papers accuse her of stealing $139,631.35 with the company credit card alone.  


Checks…and balances

One of the big lessons here is how vulnerable a company can be when all the financial information flows through just one person. Hennepin County Attorney Mike Freeman told WCCO TV: “If you have primarily just one person in charge of the money and the books going forward and backward, they can get away with thievery for a long period of time.” A clear T&E policy that specifies checks and balances, layers of approval, and periodic audits can help, and not all small businesses have such a policy. Certainly more than one set of vigilant eyes on the books can either deter fraud, or catch it early.  


Stopping fraud before it starts

The Minnesota court case is just beginning, but companies battle expense fraud every day. The Association of Certified Fraud Examiners says the median loss per occurrence is more than $30,000, and that the typical organization loses 5 percent of its revenue to fraud every year. With the right expense policy and controls, it is possible to beat those odds.


Find out how to get better visibility into spend, head off errors, waste and fraud, and free your employees to focus on what matters most. Download The Essential Guide to Managing Expenses now and get started.


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