Fight Fraud With Improved Employee Expense Controls

In an ideal world, every company would provide an employee expense fund for reasonable purchases, employees would submit only expenses that were directly related to their jobs, and the need for employee expense fraud controls would be a thing of the past. Unfortunately, the Association of Certified Fraud Examiners recently found that about 14.5% of their investigations involved employee expense fraud.

Ultimately, these fraudulent expense claims end up costing companies millions of dollars. To protect the business from this all-too-common source of loss, employers and managers must take steps to reduce their risk.

Common Sources of Employee Expense Fraud

Minimizing risk starts with developing an understanding of the most common sources of employee expense fraud. From fake receipts to personal trips and meals passed off as business expenses, there are different ways bogus expense claims can be reimbursed by trusting employers. Here are a few familiar sources of employee expense fraud, and solutions to help avoid them.

Personal Expenses Presenting as Business Expenses

You know your staff frequently entertains clients, but if that rarely happens on the weekend, there’s a good chance that receipt for a Saturday night dinner is not a legitimate business expense. Other personal expenses that are often submitted as company charges include gas and food other than what’s required for the job.

Solution: Have an expense policy that explicitly defines what is and is not eligible to be reimbursed or charged to a corporate expense card.

Missing, Duplicate or Falsified Receipts

Photocopied receipts have been known to be doctored to change dates or to allow the same receipt to be submitted multiple times. It is also common in expense policies to only require receipts for purchases above a specified threshold, which is unfortunately subject to abuse as an employee can submit a number of reimbursement requests that are just below that threshold.

Solution: Require that original receipts be submitted for every charge, or choose a corporate expense card that allows for instant photo capture of every receipt.

Inflated Mileage Claims

Mileage claims are an employee expense fraudster’s best friend. By submitting higher than actual mileage totals, and at a usual reimbursement rate of around 50 cents per mile, the damage from inflated mileage claims can add up quickly.

Solution: Require that start and end addresses appear with all employee mileage claims in your corporate expense policy. Then, the mileage can be verified in a GPS system before reimbursement.

Trust is an essential aspect of any business relationship, but it is an element that must be earned. Most employees will not have any problem adhering to the reasonable parameters spelled out in a detailed corporate expense policy, and if you do have an employee who scoffs at the implementation of such a policy, we might have a suggestion about who’s past expense reports to audit first…


Karmic is a leader in the development of corporate expense payment cards and mobile software. Our flagship product, dash, offers an integrated payment and expense management solution that gives your business the power to save time and money. Request your personalized demo today!