Traveling in High Style on the Organization’s Dime, Part 1

By Joseph R. Dervaes, CFE, ACFE Fellow, CIA
joseph-dervaes-80x80.jpg Fraud's Finer Points
Case History Applications

Travel fraud is categorized as a fictitious expense scheme. In the ACFE's Occupational Fraud and Abuse Classification System (the "Fraud Tree"), the crime is a subset of fraudulent disbursements, which is a subset of cash schemes. Travel fraud is one of the most common forms of fictitious expense schemes I've encountered during my career. Instead of overstating a real business expense, as many fraudsters do, these employees simply invent travel activities and submit completely false expense reports. Some organizations routinely pay these false claims because they have inadequate internal controls to detect them. Thus, these organizations issue checks for unauthorized business purposes, which the perpetrators then use for personal benefit. There are many travel fraud schemes, and we'll try to cover a variety of them in this and the next two columns. 

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By Dan_Andrascik
By Stephen_50
Thank you Joseph for your exceptional insights and for sharing your expertise with us. As you stated above, an entity needs effective internal control systems to lower the fraud risks of such types of fraud. Yet management should be vigilant as management review is a vital fraud prevention and detection tools that is extremely important.
By roussos
This is my favourite column of the magazine :)
By Joe Compliance
Great article! Very relevant and well written. I never tire of T&E fraud examples and/or information and best practices on how to recognize and remedy this, unfortunately, common fraud type.