Expense fraud refers to a deliberate, devised attempt at inflating reimbursements. It occurs when an employee knowingly completes inaccurate expense claims. Over-claiming for restaurant tips, submitting too much for allowed amounts, and turning in receipts for unused items or trips are some of the most common expense offenses.
They might, for example, charge your company for an expensive dinner with friends, claiming this as a “business dinner”, or expense hotel costs for a business trip that’s actually largely for leisure.
Other common reimbursement fraud schemes can include employees submitting:
- Bills for trips that were never taken, such as cancelled airline tickets or hotel registration refunds
- Claims for items they didn’t purchase, such as office supplies
- Separate car mileage bills from employees who, in fact, travelled together
- Inflated mileage totals
- Bills for non-reimbursable expenses, such as alcohol or tickets to leisure activities
Some employees are habitual cheaters and profiteers who stock up on blank receipts from cab companies and restaurants to submit phony expense reports.
It’s important to note that expense fraud is, quite often, carried out by those who are inherently honest and don’t intend to defraud their employer of huge amounts of money. More commonly, employees commit small acts they don’t associate with fraud because it’s easy and they don’t think anyone will notice. In many cases, mistakes arise because of genuine human error or employees not being aware of or understanding the expense policy.
There are a limited number of cases where there are genuine ‘bad seeds’ when it comes to expense fraud cases, but it’s still an issue that needs to be monitored. Large or small, expense fraud really does cut into a company’s bottom line, driving up business costs in the process.