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THE TEMPTATION TO PAD EXPENSEREPORTS CAN BE POWERFULIf an employee is in a position to claim $100a week in false expenses, that employee boostshis or her take-home pay by $5,200 a year.

Better yet – for the employee, at least – travelreimbursements are usually exempt fromtaxation. So that unreported $5,200 can turninto the equivalent of an $8,700 pretax pay raise.

We raise this example not to recommendcheating, but to illustrate how the temptation tocheat – whether to earn tax-free cash or simplytravel in greater luxury – can be powerful. Awise administrator will learn the tricks andestablish an audit program to catch them.

The following examples are meant to alert youto tactics for padding flight, hotel, and car rentalexpenses. We hope you find them helpful inmanaging what, for many companies, isthe second-largest area of expense after payroll.

Certain material contained in this publication,including examples of potential employee tricks,are drawn from and reprinted with permissionfrom How to Pad Your Expense Report … andGet Away With It!, by “Employee X,” availableat online booksellers.

TricksEmployeesUse toPad TheirExpenseReports

TricksEmployeesUse toPad TheirExpenseReports

Canceling a leg of flight andgetting a refund your employerdoesn’t know about. Filchinghotel stationery to “create” yourown receipt. These are just someof the tricks revealed in this freeADP® reference.

AUTOMATING EXPENSE REPORTING CANREDUCE THE COST OF EVERY EXPENSEREPORT TRANSACTION BY 72%*OR MOREADP’s Travel & Expense Management Solution givesyou efficient tracking, reporting, and management – allin one powerful on-demand service:

• An online booking system searches hotel, flight, and carrental inventory from virtually all sources and indicateswhich options comply with your corporate travel policy.

• ADP’s Travel & Expense Management Solutionelectronically captures receipts, generates expensereports, and deposits electronic payments to filers withinfour business days.

• Automatic corporate credit card data import reduceskeying errors, resulting in fast report creation andcleaner data for analytics. Because it is an end-to-endservice, the click that books the trip also creates theexpense report.

ADP’s Travel & Expense Management Solution automatically displays an alert when anonline travel option does not comply with corporate policy.

For more information, contact yourADP Representative,or visit ADP.com and search for “Travel and ExpenseManagement Services.”

*Travel and Entertainment Expense Management Automation: Reduce Costs, ImproveControl, Aberdeen Group, June 2009.

Claiming personal use of a car, but renting insteadIf work requires an employee to drive to a distantlocation (e.g., a trip that, with incidental stops anderrands, might add up to 1,000 miles), he mayprofit by renting a car while claiming the miles onhis personal vehicle. A three-day car rental, withunlimited mileage, can cost as little as $77, whilereimbursement at 55¢ a mile gets the employee$550. The employee saves wear and tear on hiscar, while pocketing some extra money.

COMBINING A CORPORATE CREDIT CARDWITH AUTOMATED EXPENSE REPORTINGCAN DEFEAT MOST OF THESE TRICKSAs you may have noticed, most of thesevulnerabilities occur when employers cannotmatch reported expenses against actual spendingand returns. An effective countermeasure,therefore, is to combine a corporate credit cardprogram with automated travel booking andexpense reporting.

“With a solution like ADP’s Travel & Expense,”explains Joy McManus, an ADP Travel andExpense Specialist, “hotels, airlines, rental car andcredit card companies provide a nightly data feedof transactions and receipts. The system compareseach credit card charge to the hotel’s e-receipt andairline’s record of unused tickets. It automaticallymatches them to the employee’s itinerary in thebooking system. Not only does this prevent nearlyall the fraud ‘Employee X’ describes, it’s a greatconvenience for honest employees.”

TRICKS EMPLOYEES USE TO PADFLIGHT EXPENSESWhen employees want to put a few hundreddollars per expense report into their pockets,airline tickets are the easiest way to do it.

Double-booking tickets for profitAs soon as the employee knows he’s making atrip, he buys a ticket. He then waits until theweek of the flight and books a refundable ticket,which will most likely be more expensive. Closerto the day of the flight, he cancels the refundableticket, flies on the previously booked discountticket, and submits the higher-priced receipt withhis expense report.

Alternatively, the employee can book a refundablefare early and watch for fare wars. He books thediscounted flight and submits the earlier, higher-priced receipt for reimbursement.

Flying less to make more moneyAn employee books a fully refundable multi-cityflight and cancels the last leg of the trip (ending upwhere she meant to all along). The airline creditsher credit card for the difference in fares. Shesubmits the original receipt with her expense report.

TRICKS EMPLOYEES USE TO PADHOTEL EXPENSESGetting blank invoices from the hotelWhen checking out, the employee says to theclerk, “Hey, I really like the layout of yourinvoices. I’m sure my boss would like to see ifyour format would work for our company. May Ihave a few sheets to take back with me?”

Young and inexperienced clerks are reluctant tosay no to a guest. The employee fills in the formson his home computer.

Keeping discounts a secret until checkoutIf an employee is eligible for a discount, she doesnot mention it until she has received a receipt forthe full “rack” rate. She then contests the charges,saying, “Hey, this was supposed to be the AAArate. I mentioned that when I reserved the room.”She submits the first, higher priced receipt withher expense report.

Double-billing for room serviceRoom service meals usually arrive with a blanktear-off receipt. An employee charges the meal tohis hotel bill. He then uses the tear-off receipt toclaim an additional expense at a different time.

TRICKS EMPLOYEES USE TO PADCAR RENTAL EXPENSESSubmitting coupons after getting a receiptMany rental companies offer discount coupons.When an employee returns her car, she waits untilafter the attendant has printed out her receipt. Shethen goes into the office and claims there hasbeen an error.

Switching gasoline receiptsSome older gasoline stations leave blank receiptsnear the cash register for customers to take. If theservice attendant insists on completing the receipthimself, but hand-writes a few dollars, adding aone in front can raise the amount from $8 or $9 to$18 or $19. Alternatively, a one can easily becomea seven, especially on a carbon copy.

Another trick is to check the self-serve island forreceipts previous customers have dropped into thetrash. Travelers can find computer-printed receiptsfor many dollars more than what they paid. Thereceipt will have a location and date stamp thatmatch their travel plans.