According to the 2018 ACFE Report to the Nations on Occupational Fraud and Abuse, the median loss from occupational fraud costs the professional services industry $258,000. The most common scheme surrounds expense reimbursements.
An expense reimbursement scheme occurs when an employee files a claim for reimbursement of fictitious and/or inflated business expenses, based on false documents. Employees can either mischaracterize expenses, overstate expense reports, seek reimbursement for fictitious expenses or submit multiple reimbursement requests. Fraud perpetrators accomplish this in a variety of ways:
- Alter actual receipts
- Overpurchase business expenses
- Overstate another employee’s expenses
- Produce fictitious receipts
- Obtain blank receipts from vendors
- Claim the expenses of others
What can you do to detect and prevent expense reimbursement schemes?
- Review and analyze expense accounts by comparing current expenses to historical or budgeted expenses.
- Perform a detailed review of employee expense reimbursements, which may include a review of employees’ schedules.
- Require employees to submit detailed receipts or other supporting documentation and provide an explanation of expenses before payment is reimbursed.
- Periodically review employee expense reimbursements.
- Understand the travel and entertainment policy of the company.
If you have any questions regarding expense reimbursement schemes, feel free to contact us at [email protected]
