5 Simple Steps to Prevent Expense Fraud (Entrepreneur Magazine)

Entrepreneur Magazine (By Chris Farrell): Consider the following expense fraud scenarios: airfare for a canceled flight, a $50 travel meal of Ketel One and sodas, and pay-per-view movies lumped into the nightly hotel room rate.

While it’s easy to believe a few dollars here and there won’t hurt, expense fraud adds up over time and is difficult to detect. A recent survey conducted by the Association of Certified Fraud Examiners revealed that employees comprising the “Executive/Upper Management” level in a company account for nearly 27 percent of expense reimbursement fraud cases. The resulting disciplinary measures and dismissals of key employees can be a tremendous distraction — just ask Hewlett Packard and Walmart.

Without clear and firm guidelines for expense reports, employees are more likely to cross the line. However, following these five simple steps can mitigate the risk:

1. Start by defining your expense report policies. Smaller companies will typically have a simpler set of policies than larger organizations. That said, the following recommendations apply to companies of all sizes:

  • require expenses be submitted within 30 to 60 days of incurring the expense
  • require receipts for all purchases over $25
  • require itemization of multi-category purchases such as hotel stays (pay-per-view movies go under “Entertainment,” room service belongs to “meals”, etc.

Continue reading at Entrepreneur Magazine.

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