Fraud Basics

When travel for business becomes fraudulent pleasure



Many organizations allow business-traveling employees to report certain expenses and receive reimbursement for these costs. Unfortunately, this can lead to expense reimbursement fraud. This fraud is a form of asset misappropriation in which an employee steals or misuses their organization’s resources. This scheme can consist of outright fabrication of expenses or inflation of actual expenses for things like airfare, lodging or gas mileage.

According to the 2016 ACFE Report to the Nations on Occupational Fraud and Abuse, expense reimbursement fraud caused an estimated median loss of $40,000 for companies. This type of fraud is rarely discovered immediately when it occurs — the median time to discovery is approximately 24 months.

Some examples of reimbursement fraud might include the following:

  • Charging for items that were used for personal reasons, such as gas, groceries or hotel stays.
  • Billing for travel expenses that never actually materialized, such as canceled flight tickets or convention registration fees.
  • Seeking reimbursement for items that were never purchased.
  • Collusion among multiple employees to bill separately for travel expenses, even though they traveled together.
  • Falsification of receipts.
  • Claiming travel and entertainment (T&E) expense reimbursements in excess of the allowed per diem amount or purchasing unapproved items like alcohol or sports tickets.
  • Requesting reimbursement for tips greater than were actually given.
  • Choosing more expensive options than necessary, such as flying first class instead of business class or renting a limousine instead of taking a cab.
  • Falsely inflating gas mileage totals.

 


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By Gerald_13
 
By Hussain_AlNassri
Thank you, I would agree with the control tips you have entitled in your article and I Think every organization should have a sound internal control system that could either prevent or detect a certain risk ( concerned risks) however short term costs might block the way and open some gaps which might lead to uncontrolled loss.