Expense reimbursement schemes can be a significant issue for many organizations. Fraudulent expenses are often approved and paid without being detected by managers, the accounting department, or payroll. These pay outs of fraudulent expenses directly impact the bottom line of an organization.
Common expense reimbursement schemes include:
By implementing a formal expense reimbursement policy and reviewing the process with employees and approvers at least annually, organizations can reduce the risk of fraudulent expenses being approved and paid.
When creating an expense reimbursement policy, consider the following best practices:
Most importantly, enforce your policy! If employees realize the policy is not being enforced, they are less likely to follow it.
Preventing the pay out of fraudulent expense reimbursements not only protects the bottom line from the pay out of false expenses, it also makes an organization less likely to fall victim to other types of organizational fraud. In 75% of expense reimbursement schemes, the employee was also undertaking at least one other form of organizational fraud.