Travel and subsistence fraud

It refers to the fictitious bills related to expenses made by employees or business partners. In such frauds, the workers often overstate the costs related to travel activities and may submit false claims to get refunds. Many organisations do not provide such claims because they find it difficult to identify or audit forged bills. 

It can be some high-risk transactions where the employee manipulates the expenses and may indulge in unauthorised trips for personal benefits or claim funds that infringe the policies and procedures of the firm, like trying to get refunds for personal amenities or alcohol that may be prohibited. 

Some of the different ways the employees claim the bills are- 

• They may try to get refunds for buying items like groceries or hotel stays – that are not permitted.

• They give bills against goods or services they never purchased, like cancelled flight tickets, registration fees, etc.

• They opt for expensive travelling options like hiring a limousine instead of a cab.

• They offer fake receipts and inflate the mileage. 

• They fill in excess claims for meals or entertainment compared to the allowed limit.

• They may add tips to reimbursements.

How To Prevent It?

• Organisations should adopt strict policies. For example - they should maintain travel guidelines and educate employees about the policies.

• Always conduct a review of employees’ bills. Seek original documents and reports for audit purposes.

• Always question the expenses when they appear extraordinary.

• Businesses should have a formal model of disbursement that happens through a monitored payroll system. 

• Implement the policies related to corporate charge cards and receive credit activity reports every month from the employees. 

• Impose strict penalties for offenders.