Fuel and Transportation Expense Fraud

Shut Off The Gas Nozzle

By Ryan C. Hubbs, CFE, CIA, CCSA, PHR

2009-JanFeb-Fuel and Transportation Fraud 
Fluctuating gas costs and tough financial conditions are tempting employees to steal in creative ways. Don't get caught with outdated controls and review systems.  


A handful of city employees recently found a way to save on gas and supplement their incomes by distributing their city-owned fuel credit cards and pass codes to friends and family members.

City officials knew that increasing gas prices and worsening economic conditions might tempt some workers to defraud the city so they conducted a proactive audit. They found several instances of suspicious activity and began investigations. Law enforcement found many people illegally using the fuel cards to the tune of more than $50,000 in only two months. If the city hadn't conducted the audit, the losses could have been huge. Two city employees handed cards to five individuals; seven were arrested.

All organizations are affected by fluctuating fuel and transportation costs. Everybody is looking for ways to soften the pain at the pump. Carpooling and fuel conservation are two of the top choices for saving money. But there are growing numbers who are turning to fuel and transportation fraud.

When fuel was cheaper, the risk for fraud was relatively low. But, of course, the situation has varied considerably in the past four years. According to gasoline price data kept by the Energy Information Administration of the U.S. Department of Energy, U.S. regular conventional retail gasoline prices were approximately $1.83 per gallon in September of 2004. Four years later, prices were up more than 100 percent (though they have greatly decreased recently because of the worldwide economic downturn).

In June of 2008, The New York Times published a graphical representation of the percentage of income spent on gas for citizens living in the United States; the figures range from 2 percent to as high as 16 percent of personal income being spent on fuel. The impact on your employees could be so significant that some might be resorting to devious alternatives.

We're trained to recognize that where there's more opportunity and pressure, there's also an increased propensity for rationalization and fraud. Opportunities have increased as organizations expand into the national and global economies.

For full access to story, members may sign in here.

Not a member? Click here to Join Now. Or Click here to sign up for a FREE TRIAL.