Travel Expense Management Uncovers Sabotage And Results In Hefty Fines

Travel Expense Management Uncovers Sabotage And Results In Hefty Fines

Travel Expense Management Uncovers Sabotage And Results In Hefty FinesMorgan Stanley, one of the most prominent financial firms, has become the focus of internal fraud over the past few years. For a company whose employees deal financial brokerage and accounting concerns, it appears surprising that manipulation of receipts and expenses could actually be seen as a means of making personal gains. Further, the lack of travel expense management that led to this theft also translates to possible losses for clients of the firm.

As the case unfolded, it was discovered that a veteran broker was falsifying travel receipts, with one restaurant reimbursement coming to over $4000 (US). Interestingly, the broker’s defence involved stating that he was entitled to the extra money for his years of service, and also that his manager approved the spending. From the higher corporate perspective, however, travel expense management is far more black and white in terms of validity.


The Cost Of Crime

The zero-tolerance policy that is in place at the Morgan Stanley firm led to an immediate dismissal of the broker. However, since this infraction occurred with a certified financial officer, the US Financial Industry Regulatory Authority (FINRA) took further action and considered the strong disciplinary strictures that have been prevalent in other cases where brokers have appropriated funds. This is also due to the fact that travel expense management is one of the area where companies can find better control in monitoring employee spending.

Historically, in the eight cases that FINRA has already tried, the brokers in question were barred from the industry. The infractions that were cited included fabricated canceled checks and fake expenses for trips to conferences that never actually happened. In one case, the employee was confronted with having forged a supervisor’s signature, and this resulted in both a one year suspension from trading and a hefty fine.

Travel expense management is a two way path, regardless of the industry. While administrative accountants are responsible for verifying receipts before authorizing a reimbursement, employees are also responsible for the accurate documentation of expenses. Outright forgery is an obvious infraction, but in the case of the broker from Morgan Stanley, he stated that he has lost receipts and was told to estimate the expenses based on his credit card statements.


Making A Change For Trust

Travel expense management can be a streamlined process that benefits the company and the employees. While the obvious result is a reduction of employee fraud and lost funds, the use of travel expense management software can integrate a number of features that allow for a better scrutiny in verifying reimbursements as well as ease of documentation for the traveler. Programs that incorporate credit card integration into the system and can even use capture features for paperless documentation of receipts all make the process much simpler and clearer.

It should be noted that FINRA strongly supports the greater vigilance with travel expense management, as this also saves the time and labour that can go into a full company audit. When businesses are able to police their own, they are also able to address how these actions impact client trust. For financial companies, travel expense management becomes an even more pressing concern, since clients are relying on these establishments to manage their own money, and it sets a poor precedent if the firm cannot even manage their employee expenses.