Expense Reimbursement Schemes

1
Chapter 7

• Expense Reimbursement Schemes

2
Expense Reimbursement Schemes
Mischaracterized Expenses
Overstated Expenses
Fictitious Expenses
Multiple Reimbursements
3
Frequency of Fraudulent Disbursements
Expense Reimbursement
4
Median LossFraudulent Disbursements
Expense Reimbursement
5
Dollar Loss DistributionExpense Reimbursement
Schemes
6
Detection of SchemesExpense Reimbursement Schemes
7
Perpetrators Expense Reimbursement Schemes
8
Median Loss by Perpetrator
9
Size of VictimExpense Reimbursement Schemes
10
Median Loss by Number of EmployeesExpense
Reimbursement Schemes
11
Expense Reimbursement Schemes

• Employees are reimbursed for expenses paid on
  behalf of the employer
• Airfare, hotel bills, business meals,
  mileage,ground transportation and so on
• Business purpose explained and receipts attached
  per the organizations guidelines

12
Mischaracterized Expense Reimbursements

• Purpose of reimbursement request is misstated
• Reimbursement for personal expenses not allowed
• Personal trips listed as a business trips
• Non-allowable meals with friends and family
• Most are by high-level employees, owners, or
  officers (in the study)
• Common element lack of detailed expense reports

13
Preventing and DetectingMischaracterized Expenses

• Establish a policy that clearly states what will
  and will not be reimbursed
• Require detailed expense reports with original
  support documentation
• Require direct supervisory review of all travel
  and entertainment expenses

14
Preventing and DetectingMischaracterized Expenses

• Scrutinize any expense report that is approved
  outside the requestors department
• Compare dates of claimed expenses to work
  schedules
• Compare prior year expenses to current year
  expenses and to budgeted expenses
• Track expense reimbursements by employee

15
Overstated Expense Reimbursements

• Altered receipts
• Overpurchasing
• Overstating another employees expenses
• Orders to overstate expenses

16
Preventing and DetectingOverstated Expense
Reimbursements

• Require original receipts for all expense
  reimbursements
• If photocopied receipts are submitted,
  independently verify the expense
• Compare employees expense reports with
  co-workers to identify inconsistencies
• Look for unusual trends in expense reimbursements
• Spot check expense reports with customers

17
Fictitious Expenses

• Producing fictitious receipts
• Personal computers
• Calculators
• Cut and paste
• Obtaining blank receipts from vendors
• Claiming the expenses of others
• Other forms

18
Example Fictitious Expenses

• Robert obtained blank letterhead sheets from
  hotels and then created an Excel template to
  reproduce invoices. He created and printed,
  using the hotels letterhead sheets, invoiced for
  fictitious dates and amounts. Caught when an
  internal auditor noted invoices from different
  hotels with the same format.

19
Preventing and Detecting Fictitious Expense
Reimbursements

• High dollar items that were paid in cash
• Expenses that consistently rounded off, ending
  with 0 or 5
• Expenses that are consistently for the same
  amount
• Reimbursement requests that consistently fall at
  or just below the reimbursement limit
• Receipts that are submitted over an extended time
  that are consecutively numbered
• Receipts that do not look professional or lack
  information about the vendor

20
Multiple Reimbursement Schemes

• A single expense item is submitted several times
  to receive multiple reimbursements
• Example Airline ticket stub and travel agencys
  invoice
• Submit the credit card receipt for items charged
  to the companys credit card account
• Submitting the same expenses to different budgets

21
Preventing and Detecting Multiple Reimbursement
Schemes

• Enforce a policy against accepting photocopies
• If photocopies are accepted, the accounting
  system should have an edit for duplicates
• Establish clearly what types of support
  documentation are acceptable
• Scrutinize expense reports that are approved by
  supervisors outside the requestors department
• Require expense reimbursements be approved by the
  employees direct supervisor
• Establish a policy that expenses must be
  submitted by a certain time limit