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Expense Account FraudJennifer Sawayda

Program Specialist

Anderson School of Management

University of New Mexico

Albuquerque, NM

© O.C. and Linda Ferrell

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First, Some Stats…

• 13.8% of fraud schemes involve expenses• Common schemes involve padding expense accounts, using

company expenses to purchase non-work-related items, and falsifying reimbursements

• 27% of expense reimbursement fraud committed by managers and/or supervisors

• Median loss for organizations that are victims of expense accounting fraud is $30,000

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Fraud Triangle

Pressure

Opportunity Rationalization

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Examples of Expense Accounting Fraud

• Richie Farmer, former agriculture commissioner of Kentucky– Used state funds to pay for personal items– Sponsored a racing team owned by relative with $20K meant for a buy local

initiative– Pocketed extra gifts for commissioners paid for by state funds

• Thomas Coughlin, former vice chair of Walmart board– Used company funds to pay for personal items, including a $2,590 dog enclosure– Misused Walmart cash, reimbursements, shopping cards

• Mark Hurd, former CEO of Hewlett-Packard– Misused $20K in company funds to pay for dates and hotel rooms with part-time

employee

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Types of Common Expense Fraud

• Hotels– e.g. Placing a more expensive hotel on your expense

account than where you actually stayed• Meals

– e.g. Asking for blank receipts and filling them out with false information

• Mileage– e.g. Using company car for personal use

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Types of Common Expense Fraud

• Gifts & Entertainment– e.g. Pocketing company-funded gifts meant for others

• Taxis and Rentals– e.g. Receiving a blank taxi receipt and falsifying the amount

• Company Accounts or Cards– e.g. Purchasing personal items with company credit card

• Air Travel– e.g. Canceling a flight but still submitting in expense reports

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Controls Companies Should Take

• Have clear policies and procedures on legitimate expenses and reimbursements

• Always request itemized receipts• If necessary, double-check with the airline, hotel, etc.• Random auditing of expense reports• Clear disciplinary procedures for violations• Tone at the top support and adherence to expense guidelines