Corporate Travel Expenses: Ways to Spot Fraud

In any organization, expense reimbursement fraud can happen in a number of ways. So, which type of organization is most vulnerable and what are the best practices organizations can adopt to reduce the risk of fraudulent claims?

Fraud can happen even in organizations with company wide expense reimbursement policies. If someone is not taking a hard look at reimbursements, instances of fraud can go unnoticed.

How Accounting Department Prevents Expense Fraud

Accounting is where expense reporting fraud can be caught. Even the strongest controls cannot guarantee fraud prevention or detection. Following are a few internal controls that will help detect potential expense fraud schemes:

Limit Personal Credit Cards

When employees use personal cards instead of corporate cards, companies cannot track credit card statements and see if expenses are corporate related.

Update Policies

Corporate expense policies should be reviewed and updated on a regular basis. Also taking feedback from frequent flyers will help outline travel and expense policies that work.

Enforce Two-step Approval Process

Credit card limits and their job titles should be monitored regularly. Cards should be recovered when an employee changes positions and do not require a corporate credit card. In addition, multi-layer approval workflow should be defined to minimize the risk of unauthorized issuance.

Preventing Expense Fraud

Manual and automated controls can minimize the risk of expense fraud.

Reimbursement Policy

Having a solid expense reimbursement policy requires you to include original receipts for all expense claims, controlling personal card usage, and mandating authorization for reimbursements. Consequences for submitting out-of-policy expense claims should be clearly articulated in the policy.

Payment Method

With various payment methods being widely accepted, cash payments should be monitored carefully. Making payments using cash is one of the areas where fraud can happen the most.

Detailed Receipts

Submitting multiple reimbursement claims such as one employee submits a detailed receipt and another employee submits a credit card summary receipt for the same expense should be monitor closely for a date, other details and see if there are any details missing.

Cross-verify Employee Work/vacation Schedule

Compare expense reports to the employees’ work and vacation schedule; this will help identify personal expenses submitted for reimbursement.

Enforce Corporate Travel and Expense Policies

Enforce corporate policies consistently for everyone including the chief financial officer. If employees realize the policy is not enforced, they are less likely to comply with the company rules.

Automated Solutions

Expense report solutions are very efficient in managing employee expense reports. Key features include:

  • Flagging multiple reimbursement requests for the same expense

  • Import credit card transactions automatically

  • Pre-approval requests and multi-layer approvals

  • Audit trails

  • Comprehensive reporting features

  • Multi-currency

Despite the best practices, policies and internal controls, fraud can happen in organizations. Potential risk can be reduced by making sure reimbursement policies are clear, concise and constantly followed and enforced. The accounting department is critical and must address issues promptly. By following travel and expense policies outlined, leveraging expense report software and making sure reimbursements are done in a timely manner, you can reduce the potential risk of fraud in organizations.

Get a free product demo today to learn how SutiExpense can help streamline your business expense reporting process