5 tips: How to rein in expense account fraud

When employees return from business trips, do your supervisors sign off on their expense reports without a glance? A surprising number of those mileage forms and restaurant receipts could be doctored. Are all those credit card purchases business related?

The typical organization loses 5% of its revenues to fraud each year, and 16.6% of fraud losses trace back to expense account schemes, according to a report by the Association of Certified Fraud Examiners. The median annual loss per employer is $25,000.

Often when employees feel underpaid, they give themselves “raises” through fraud, experts say. Defeat expense scams with these tips:

1. Implement a formal policy on expense accounts. Spell out guidelines for credit card use (e.g., no personal charges allowed) and procedures for reimbursement (e.g., submission of receipts). Review all expense reports.

2. Review all credit card statements with a fine-tooth comb. Cross-reference them with expense reports to make sure employees aren’t inflating expenses or seeking reimbursement for items that weren’t purchased.

3. Question expenses that look out of the ordinary. Giving employees the benefit of the doubt will only make the problem more difficult and expensive to resolve later.

4. Discipline all offenders. If you allow violators to go unpunished, others are more likely to follow.

5. Urge senior staff to lead by example. If management flouts the company’s expense policies, employees will think it’s OK.

Top behavioral ‘red flags’ of workplace fraud