The Most Common Expense Report Fraud Schemes

The Most Common Expense Report Fraud Schemes

The Most Common Expense Report Fraud Schemes Any good business leader understands that they have to take precautions to ensure that their business isn’t dragged down by dishonest employees. Workplace dishonesty leads to billions in lost revenue each year, and about 15% of it occurs in the world of travel expenses. Expense report fraud is so common because it’s so easy for it to happen. Even when using good software, it is possible for clever employees to slip by the safeguards and get reimbursed for dishonest claims.

Knowing some of the most common ways that employees abuse the expense report is a good idea, and can help you learn to recognize when fraud is occurring. Here are some of the most common types of fraud your dishonest employees could try.

  • Inflating Expenses – This involves taking an acceptable expense and adding money to the total cost. For instance, a $5 meal becomes a $12 one. This is common when you use a reimbursement process, and the employee gets to pocket that extra difference.
  • Claiming Non-Acceptable Items – When your team is on the road it’s easy for them to spend extra money that isn’t related to your company. Turning in those expenses on an expense report is a common type of fraud, and the idea is simply to get you to pay for their additional, non-business purchases while on the road.
  • Day-Off Expenses – If your team is on a long trip, they still have days off and time off. Purchases that take place on a Sunday at 11pm, for example, aren’t likely to be business related. But they still get turned in on expense claims.
  • Double Billing – Submitting the same purchase twice under different trips is another type of fraud, and one that is growing in frequency. This is harder to do thanks to today’s software programs, but is still worth mentioning.

The key to cutting down on these types of expense report fraud is twofold – first, you need to invest in good automated expense management software to help reduce the chance of most of the issues even occurring, and of identifying it when it does. Second, you have to be proactive when it comes to overseeing employee expenses. Pay attention to your expense reports each month, compare spending between employees, and look at individual spending. If you’ll do this, you should be able to identify fraud before it becomes a major problem for your business.