Occasionally, people make mistakes when they submit expenses. Most of the time it’s harmless but sometimes there can be malicious intent behind it. Organisations can understand the risks of expenses fraud and take steps to prevent it if they know what it is.
Matt Goss, managing director – Australia & New Zealand, Concur, said, “The issue of fraud arises when the boundary is crossed between honest mistakes and deliberate attempts to circumvent rules.
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“While mistakes, by definition, are easy to detect, fraudulent expense activities require a considered effort to cover up the trail, and perpetrators can get very creative in their tactics. The cost of fiddling expenses can have repercussions that go far beyond the balance sheet. Fraud also affects company morale and is considered a serious workplace crime by employers. Suspicious activity around expenses also has implications for the tax businesses pay.
“While fraud can affect any business, it thrives in companies with opaque, complex and paper-based systems. Improved policies and comprehensive travel and expense solutions can help impede and prevent many types of expenses fraud, as well as protect the reputations of companies that can demonstrate they are taking steps to prevent it.
“Providing business travellers with tools they can use to make submitting expenses easier is likely to discourage fraud. But, while technology plays an important part, the impact of business culture is key. If employees feel that fiddling expenses is acceptable or justifiable, then technology is unlikely to deter them from finding ways around the policy.”
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Common tactics for fiddling expenses – seven red flags to watch for
1. Inflating receipt amounts. Inflating the amount on a receipt is an easy way to claim a few extra dollars after a business trip, especially for meals and taxi charges, which are often paid in cash. Often, receipts for these items are simply a handwritten slip that is easy to alter. Some employees might also add the cost of a personal guest’s meal when they’re at a company-related event.
2. Claiming fake receipts. In some instances, employees have even been known to create fake receipts. It is essential to ensure that the receipts and associated submitted expenses are logical and appropriate.
3. Not submitting receipts. Expenses paid to employees should be supported by relevant records, like receipts. But not everyone knows this rule, or pays attention to it. Intentionally losing a receipt, when one actually never existed in the first place, is one way that people can claim cash especially if their manager is generous, or turns a blind eye.
4. Double-dipping. Claiming legitimate expenses more than once is called double-dipping. It happens when employees submit an original receipt in one month and a copy of the same receipt the next, or when they try to claim reimbursement for the same purchase twice, once using the receipt and once using their credit card statement.
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5. Cancelling travel, but still claiming it. Some devious employees have claimed for flights they haven’t actually travelled on. This scam involves booking a flexible flight or train ticket, for example, and cancelling it in advance of the trip. They would then be refunded but still claim it as an expense that went through their credit card, and be reimbursed by their company as well.
6. Downgrading dilemma. Travellers who are allowed by policy to purchase premium-class flights have the ability to downgrade at the counter or directly through the airline. In this case, some have been known to get a reimbursement for the difference or use the difference to purchase a ticket for a companion.
7. Making it personal. People might be tempted to claim reimbursement for personal expenses by classifying them as business-related expenses. Although these claims may be as small as a lunch bill, there have been instances where employees have even claimed, and been reimbursed for, their personal holidays.