The 4 Common Types Of Expense Report Fraud

The 4 Common Types Of Expense Report Fraud

The 4 Common Types Of Expense Report FraudExpense report fraud is costly, and it’s illegal, but it’s still something that companies all around the world will be faced with. When one thinks of expense report fraud, bigger businesses probably come to mind first, but in truth it’s the little guy that is most at risk. It’s difficult to determine what could be considered innocent human error, and what may be considered expense report fraud, which is why getting exact statistics can be difficult.

Generally, there are 4 common types of expense report fraud according to the Associated of Certified Fraud Examiners, and these types include:

  1. Fake expenses – Fake expenses are fraud, and a type that cannot be confused with innocent human error. Fake expenses involve fictitious purchases backed up by fictitious and often handmade receipts for things that were never actually purchased in an effort to be “reimbursed” for expenses that were never incurred.
  2. Personal expenses – Another type of fraud that cannot be confused with human error is personal expenses. This type of expense report fraud occurs when employees attempt to get reimbursement for purchases that were personal and not business related during business travel. Often these expenses are framed as if they do have to do with business.
  3. Multiple reimbursements – Multiple reimbursements may be human error, or they may be fraud, and it can be difficult to tell. This type of possible fraud occurs when the same expense is reported multiple times on an expense report. If the expense is reported twice on a longer report, it could be chalked up to human error, but several times or more than once on a short report is where things become suspicious.
  4. Overstated expenses – Like multiple reimbursements, these can be due to human error or they can be considered expense report fraud. Overstated expenses are when expenses are inflated when they are reported, and legitimate expenses are reported higher than their actual cost.

Automated expense reporting can eliminate the human error aspect of creating expense reports while it also blocks methods of fraud. Companies can lose tens of thousands of dollars or more due to human error and expense report fraud, which seriously hurts their bottom line unnecessarily.