Almost 94 per cent of employees say that they always only
submit accurate and legitimate expenses. The five per
cent who admit to falsifying their expenses claim to get
away with about $2,500 each per year. As a result, it’s es-timated
that expense fraud committed by employees adds up to
nearly $3 billion per year across North America.
For some, it may be just the occasional expense, such as a $30
personal taxi receipt that’s snuck in as a legitimate charge, after the
employee has taken public transport to a business meeting. It may
be viewed by the individual as not being a big deal. After all, what
about all those unpaid hours that they put in? On the other end
of the scale, an executive could buy a full-fare business class airline
ticket (which is allowable under the expense policy), submit the
receipt for reimbursement and then cancel the ticket and purchase
a cheaper economy fare on the same route. Again, the employee
may see little real harm done, as the company was willing to pay
for the expensive ticket, so it’s not as though they’re costing them
any more money.
While these employees may think they aren’t doing anything
particularly wrong, in both the eyes of the law and corporate HR
teams who will have to deal with them, these are clear-cut cas-es
of fraud, and are grounds for both termination and possibly
prosecution.
There are, of course, employees who deliberately inflate and ma-nipulate
expenses as a calculated effort to defraud their employer.
Creating, falsifying or editing receipts to increase reimbursed
amounts, deliberately resubmitting receipts and colluding with
others to submit and approve false expense reports are all relative-ly
commonplace.
PREVENTION IS BETTER THAN CURE
Any police officer will tell you that it’s more effective to prevent a
crime from taking place than finding and prosecuting a criminal.
The same holds true for expense fraud – no HR professional en-joys
the experience of terminating an employee, and would much
rather any fraud be stopped before it occurs. In fact, a significant
amount of expense fraud is opportunistic as opposed to calculat-ed.
Maybe it’s viewed as only a few dollars that nobody will notice,
or in the case of the economy flight mentioned above, it’s money
that would be spent anyway.
In this instance, educating employees and removing the tempta-tion
to easily submit false expenses will likely be enough deterrent.
Creating a realistic, fair (this is important, so employees don’t feel
aggrieved at employers’ perceived stinginess) and well-communi-cated
travel policy is a major first step. If your organization still
uses a manual expense reporting solution, upgrading to expense
automation software is critical. This allows companies to automate
expense policy rules, so that, for example, restaurant expenses have
a fixed per-person limit and require submitters to name each per-son
who dined with them. Simply by letting employees know that
Continued on page 27
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security
Reducing Employee Expense Fraud
STRATEGIES AND TOOLS
By Greg Allworth
HRPROFESSIONALNOW.CA ❚ MAY 2017 ❚ 25