Travel and expense reimbursement fraud is one the easiest ways employees can get away with stealing from your company.
A study released last month by Oversight Systems, an expense report technology provider, found that 20 percent of employees have committed expense fraud, filing at least one expense that did not comply with the company reimbursement criteria.
According to Oversight, 5 percent of employees committed 82 percent of all the expense infractions, suggesting that these employees were able to get away with it on multiple occasions. The study also revealed that travel-related expenses like airfare, hotels, and car rentals were the most difficult for companies to validate.
This can be a devastating problem for employers. Corporate expense fraud cost the companies in its study about $14 million in losses during a three-month period earlier this year. To combat the issue, check out some of the safeguards business accounting firm StoneBridge Business Partners suggests to its clients.
Create a Fraud-Proof Reimbursement Policy
Clearly communicate to employees what they can and can't buy on the company dime. Per diem amounts should also be indicated. Reimbursing employees should be handled by accounts payable or payroll--never reimburse employees in cash.
Ask for Original Documentation
Receipts are crucial in validating expenses because they indicate the exact amount charged as well as the time and place of purchase. Communicate to employees that they should include original receipts in their reports or to keep them for future audits. Routinely auditing an employee's expense report can keep your company on guard.
Implement a Formal Review Process
Different departments should review each expense report to ensure proper company compliance. Have managers, payroll, and HR review and question reports with large or suspicious out-of-pocket expenditures.
Use Corporate Cards
With charge cards, employers have more control over the company expenses. Request the activity on each card individually to cross-reference the expense report. To prevent duplicate expenses, have a consistent policy and stick to employees either filing for reimbursements or using the company card.
This may be a harsh move, but fraud is a serious crime. Letting serious violators off the hook reassures them of the lack of consequences and can encourage other employees to follow suit.