Work-related travel is commonplace and often necessary these days, but that doesn’t mean there aren’t a multitude of implications related to this topic. A recent article in the November/December 2011 issue of FRAUD Magazine touched upon a variety of fraud schemes related to employee travel. The article, titled “Traveling in High Style on the Organization’s Dime,” gave multiple examples of uncovered frauds including:
- Renting a vehicle (which is paid for by the organization) while also submitting expense reimbursements for mileage.
- Having hotels and airlines bill the organization directly while also submitting those same expenses for personal reimbursement.
- Booking refundable coach airline tickets, which are submitted for reimbursement, and then exchanging the ticker for a cheaper fare and pocketing the difference.
- Using both original receipts and credit card processing slips from hotels and restaurants to turn in the same expense twice.
- Requesting reimbursement for airline tickets, then cancelling the ticket and keeping the airline credit for personal use.
- Altering receipts to increase the amounts due for reimbursement – turning ones into fours or sevens (so that a $10 charge becomes a $40 charge) or adding numerals to amounts (so that a $55 charge becomes a $155 charge).
Taking the time to reconcile all travel expenses is a good start to catching duplicate submissions, but obviously it would be quite difficult to catch some of these schemes! Having an expense reimbursement policy that requires original receipts with detail (not the credit card slip) to be submitted within a specified time frame is also helpful.
However, the article’s author raised a good point to eliminate the opportunity to falsely submit or alter mean charges: Reimburse on a per diem (which is Latin and translates to “for each day”) basis. While organizations would need to have a policy in place to outline the specifics, using per diems would basically grant employees traveling for work a set dollar amount to spend on meals each day. If they spent less than this daily amount, they can rightly pocket the difference. If they spent more, it becomes a personal expense that is non-reimbursable. This eliminates the need for employees to create expense reimbursement reports documenting the amount spent on business travel.
The General Services Administration has more information related to per diems, including guidelines based on various UScities at their website.
Jessica Puckett, CPA, CFE