Modern expense management demands more than rules, it requires vigilance, creativity and proactive engagement. When it comes to expense report policies, most companies focus on the obvious pitfalls unclear reimbursement limits or missing receipt requirements. But the costliest mistakes often lurk beneath the surface, stemming from strategic oversights and systemic flaws that can undermine your entire expense management program. Here are 10 expense policy mistakes, with real-world abuse stories and new strategies to protect your organization.
Policies that use unclear terms like “reasonable” or “typical” can lead to wild interpretation. One company reimbursed a $1,200 dinner at a steakhouse on the logic it was for “team-building,” sparking internal friction when others claimed the same. A U.S. government official's staff reportedly exceeded per diem budgets some lodging far above allowable rates even misusing EV charging spots.
Solution: Define all terms (e.g., per diem max amounts, eligible locations) with hard cutoffs.
Some firms only ask for receipts above a threshold, letting smaller fraudulent charges slip. In one Reddit thread, employees attempted to expense tanning beds, babysitters and luxury wine—all below the required receipt minimum.
Solution: Mandate receipts for all expenses and use mobile apps for instant uploads.
Senior staff or frequent travelers sometimes fly below radar. Consider the executive at Food52 who spent $270,000+ on designer clothing and luxury travel, disguising purchases with creative coding until a whistleblower came forward. A water commission CEO incurred over £168,000 in personal expenses on things like fast food and a £77,000 Harvard course. NBA executive Jeff David stole 13 million from the Sacramento Kings during his tenure as the team’s Chief Revenue Officer.
Solution: Audit high-volume spenders regularly; rotate audit reviewers to prevent “friendly” patterns.
Combining travel with vacation, or unclear rules for “mixed meals,” lets personal costs sneak in. Robert Half International in a recent survey of CFOs, found that some of the most outrageous common personal expenses employees claimed were ski trips, lottery tickets, spa days and cosmetic surgery. A medical sales rep expensed a month-long Honolulu Airbnb ($15,000), which yielded zero business results and triggered a policy overhaul.
Solution: Require itinerary and purpose statements for travel; flag expenses outside normal business parameters for review.
Today’s fraud often hides in GL codes. The Food52 executive labeled luxury purchases as “F&B” and “production,” not raising system red flags. Perpetrators sometimes split purchases or reclassify to exploit automation.
Solution: AI-powered expense analysis to catch suspicious categories and patterns.
Research found employees expensed Tiffany jewelry as “client gifts” and charged strip-club meals on company cards, bending entertainment rules with bold creativity.
Solution: Set concrete limits on gifts, name banned categories and require signed justification for large entertainment expenses.
Credit card fraud is rising; a Virginian man charged over $100,000 in personal expenses to his corporate card ranging from luxury cars to electronics. Another employee spent $6 million on Apple products, undetected for five years.
Solution: Pre-approve vendors, set merchant category code (MCC) restrictions and require supervisor pre-authorization for large purchases.
Slow and confusing approvals cause rush jobs, missed checks and sneaky additions. Employees take advantage when overwhelmed managers “batch approve” without reading.
Solution: Streamline process, automate low-value approvals and randomize secondary reviews.
A review revealed $5 million lost yearly to duplicate payments for every $1 billion processed. Sometimes employees claim the same meal under different project codes or request reimbursement on multiple platforms. A Quest Diagnostics manager faked invoices and expense reports totaling over $1.2 million.
Solution: Centralize system, use duplicate-detection algorithms and require matching to trip/meeting IDs.
Some organizations lecture but rarely discipline offenders. A nonprofit director stole $161,000 over five years by charging personal items to charity funds and never faced deterrence until sentencing.
Solution: Define and communicate consequences: written warnings, repayment, termination and criminal prosecution where warranted.
ExpensePoint addresses these policy mistakes head-on:
Want policy rules that actually work and stop even the wildest claim before it’s paid? Let’s build it together. Talk to our team about switching to ExpensePoint.