Chris Woodyard is a business travel writer for USA TODAY and writes this column for USATODAY.com Travel every other week.
You can contact him at firstname.lastname@example.org
No matter how well a business trip goes, there's one mundane task left over that most travelers would rather skip — filling out an expense report.
I hate them. All the time I'm on a trip, I have to stuff little wads of paper — taxi receipts, meal tabs, even $1 transactions for newspapers at airport shops — into my briefcase. Oftentimes, it's not because my company requires them for reimbursement. Our limit for needing a receipt, the same as the policy at many large companies, is $25. Rather, I'm just afraid of forgetting about an expense and cheating myself.
Some employees go the other way and cheat the company instead. A hundred bucks here on meals never eaten, another hundred bucks there on cabs never caught and pretty soon, they have that nice little bonus that the company forgot to put in their paycheck.
Increasingly, the cheaters are playing a dangerous game.
Now that more expense reports have gone electronic, companies are getting better at finding expense account fabricators. They are using computer programs that can spot suspicious patterns — dining at the same restaurant over and over, always getting dry cleaning done at the hotel or taking a suspicious number of cab rides.
Gelco Expense Management, a company that manages and audits expense accounts for companies, says it can find transposed numbers, duplicate expense amounts on the same report and whether two expense reports were filed the same day.
A worker at one company tried to double bill his expenses to both his employer and another company that worked as a contractor. Busted! It turns out both were Gelco clients. The two expense reports were automatically flagged and the employee's cheating scheme was exposed, says Vice President Dave Rotman.
The new computer programs beat the old ways of finding cheaters, which involved poring over paper reports. Travel consultant Thom Nulty says when he was a marketing executive at American Airlines in the 1970s, he suspected a salesman of cheating. The guy went to the same restaurant all the time. Nulty says he pulled several weeks' worth of the salesman's expense reports and found the receipts for the restaurant were sequentially numbered.
Today, some companies are using computers to go back and audit old expense accounts in a process a little like police detectives who use DNA technology to solve old cases. One corporate client of American Express, which also markets expense account management programs found a total of $650,000 in potentially fraudulent charges during an audit. It then leaned on employees to pay back their questioned charges, receiving 90% of the flagged billings in 30 days, says Brad Johnson, senior product manager for American Express.
Even if companies don't go the audit route, some are making it tougher for cheaters. For instance, some require their travelers to use their corporate credit cards for all their purchases. The purchases go directly onto the electronic expense account form and can't be changed.
For every new foolproof procedure, there's always someone, however, who thinks they have cracked the code.
One guy, for instance, would put fictitious expenses in his electronically filed report. He counted on his boss to never inspect the paper receipts he sent along in an accompanying envelope, says Craig Greene, a CPA specializing in fraud in Chicago. It worked until an outside audit was conducted.
It turns out it was an inside-inside job. The perpetrator was one of the company's auditors.
Expense account fraud can get "very expensive," says Joseph Wells, chairman of the Association of Certified Fraud Examiners. "And it is insidious."
A 2002 survey by the Austin-based association found that the average expense reimbursement fraud scheme, which often involves a mid- to upper-level executive, costs a company $60,000 and takes an average of two years to detect. In 1996, a similar survey pegged the cost per scheme at about $20,000.
And such schemes appear to be more prevalent. The new survey found expense reporting comprised about 12% of all corporate frauds, compared to 7% in 1996.
Whether it's cashing in full-fare airline tickets and flying secretly on cheaper non-refundables or simply grabbing a few extra taxicab receipts, the middle-income corporate traveler who spends a lot of time on the road can find ways to pad their expenses another $5,000 or $10,000 per year without too much trouble, Wells says.
But with chances of getting caught growing by the day, I have one word of advice about quietly trying to inflate your expenses: don't.
Questions or comments?