How To Prevent Employee Fraud?

How to prevent travel and entertainment fraud?

How to prevent employee fraud is a big issue concerning today’s corporate world. T&E fraud also known as expense reimbursement fraud is an internal fraud type perpetrated by insiders at all levels who work for an organization.

There are two types of Travel and Entertainment Fraud External Fraud committed by outsiders such as vendors, customers and computer hackers for example: a vendor pricing does not match regular fares, and Internal Frauds perpetrated by insiders at all levels, who work for the organization for example book a trip, don’t take it but claim for it anyway is a common travel reimbursement fraud. Here are certain tips on how to prevent travel and entertainment fraud and what are the anti-fraud controls that an organization must adopt.

The first and foremost step that an organization must take is to commence a formal review process wherein a department manager or human resource manager reviews employees’ reports. Always do an inquiry on expenses that appears to be fraudulent. Waiting for a bigger issue to arise will be a more tough and costly affair to resolve later. Make all money disbursements to employees formal through payrolls or accounts payable.

Corporate credit card abuse is comparatively low. So, implementation of corporate charge cards would provide greater control as it allows companies to query each card individually to ensure that every payment is being made against them.

Collect credit activity reports from the issuing company on a monthly basis, if using corporate charge cards as these reports are helpful in determining the number of charges that are being cancelled or credited back to each account. Comparing this activity with the actual expense reports will serve to determine accuracy.

Conduct annual audit of a sample of employee expense report to ensure they meet the company’s established guidelines. Ensure that appropriate documentation exists to support the expenditures that were requested. If a company card is used, confirm that the balance is being paid at the exact time. Fraud-audit techniques must be implemented in case the occurrence of fraud is on an alarming high.

Be consistent in treating the reimbursement activities by making the employees pay the expenditures and seek reimbursement, or by making the payment by the companies directly. Wavering between the two could end up in duplicate reimbursement to occur.

Prosecute offenders, who are found to be forging their expense reports. If they are saved from punitive actions, others will follow their actions.