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Have you ever encountered fake receipts for employee reimbursement of phony expense report items?

fake receiptsDid you know that there are fake receipt generators online? I just became aware that there are  fake generators, templates, software and services... a cottage industry!

How do you detect expense reports containing fake business receipts and how common do you think this is?

Answers

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

It is very common. It is more than likely that policies are bent and twisted and interpreted differently by people in your organization. Someone told me the following story - A new employee submits an expense report to his boss and it includes the expense of a hat on the report. The boss says, "we don't pay for hats" and crosses out the expense. The next month the employee submits an expense report with a request for a reimbursement for a hat. The boss says the same thing, "we don't pay for hats."

The next month the employee submits an expense report with no request for a hat reimbursement. The boss comments that he is pleased that the employee understands that there is no reimbursement for hats. The employee replies, "oh it is in there...try to find it."

All you can do is set policy and train your employees on their ethical responsibility. Next, you audit. When you find a breach, you act - advise that policy was not followed and give a warning. If the situation occurs again - terminate.

Sarah Jackson
Title: Associate Editor
Company: Proformative
(Associate Editor, Proformative) |

Here's a white paper on this subject, plus the macro issue of properly managing T&E expense.

https://www.proformative.com/whitepapers/travel-expense-management-guide-2014

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

In my opinion, generation of fake receipts is fraud and should warrant automatic firing.

It is one thing to try and pass on legit receipts that are/may be out of policy bounds (mistake or abuse) but going through the generation of the receipt itself (register paper / heat induced) is way way over the line.

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

Very careful with a draconian approach. Unless you are 100% sure and there is no wiggle room for interpretation, you may be looking at a wrongful termination suit. It is never cut and dry when you deal with employees. A warning is a prudent approach.

Jeff Durbin
Title: Chief Financial Officer
Company: F. Gavina and Sons, Inc.
(Chief Financial Officer, F. Gavina and Sons, Inc.) |

Always get HR involved when it comes to employee discipline issues. Make them earn their paychecks. :)

Mark Matheny
Title: VP - FInancial Planning and Analysis
Company: Novolex (formerly Hilex Poly)
(VP - FInancial Planning and Analysis, Novolex (formerly Hilex Poly)) |

How are the online options any different than someone getting blank receipts from a restaurant? That has been around forever.

Ashley Collins
Title: Director
Company: 3D Procurement Solutions
LinkedIn Profile
(Director, 3D Procurement Solutions) |

As an additional security / anti-fraud detection measure your T&E / Purchasing Card issuer may also be able to place a block on certain merchants / merchant categories that denies the card holder access to transact with those merchants. Further to this the likes of Concur / Spendvision who interface & implement Expense Management Solutions (EMS) will be able to build in policy guidelines that replicate an organisation's chart of accounts as they relate to expenses.

Ignorance is typically not an excuse however a level of pragmatism should at times be applied when considering one-off transactions submitted for approval within expense reports.

Vik Agrawal
Title: President & Co-Founder
Company: ExpensePath, Inc.
(President & Co-Founder, ExpensePath, Inc.) |

Employees who are going to commit fraud on any scale will find a way to do it. But it is rare - and of course that needs to be dealt with. What does happen a lot is little things to make up for lost receipts or an employee not remembering an exact expense but knowing they spent something so "catching up" with another expense. What you can do is put in a system that is easy for employees with things like mobile capabilities so employees can capture their expenses more accurately. Here's a story that illustrates the impact:

A customer told us that within 2 to 3 months of using our solution, she noticed that the amount of Tips submitted for reimbursement had gone down noticeably and enough to actually slightly reduce the overall T&E spend. It was because that was the plug for employees when they lost a receipt. But now with a mobile app to capture receipts right away, it wasn't needed. Was that previous behavior fraud by definition - yes, but it wasn't profiteering or malicious and disappeared when it was no longer an issue for employees.

Anonymous
(Consulting Manager) |

When I first started work at my present company, in a job that requires travel 75% of the time, the policy was to reimburse actual expenses, including meals. It was difficult sometimes to get restaurant receipts, so I ended up purchasing a package of restaurant order slips from an office supply store. Once the policy changed to reimburse meals at the IRS per diem rate, with no receipts required, I have never needed to make up a receipt again.

My point is that receipt fraud is most often done by well-meaning employees who are trying to meet company requirements. Companies that take care in setting up policies for when receipts are needed and for what types of expenses can reduce the number of fraudulent receipts employees submit. Of course, it won't eliminate the kinds of fraud that Regis Quirin shared with the story of the hat reimbursement.

Anonymous
(Chief Accounting Officer) |

Anonymous. Thanks for your comment, however the phrase"...receipt fraud is most done by well-meaning employees..." is not accurate. Fraud is committed by employees either disgruntled with their current rate of pay or employees attempting to harm their employer for some reason. The fact is that you committed fraud by turning in fake receipts because you were not responsible enough to get a receipt. Most of us in this forum have seen these tricks for years. Seems like you were lucky enough not to get caught. Hopefully you have moved beyond this now.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

My personal opinion on "fake receipts" is......(a background on my first post).

There is a huge difference between a fake generated receipt and passing it off as legitimate VS a "post it note" signed by the employee with the amount, classification and reason.

The difference?.......INTENT! I'd rather have the latter. I can tolerate the post it notes (or the run of the mill receipts you get from Staples..which are identifiable). I even use it as a joke and a mild rib to managers/executives in meetings to call their attention about the number/frequency of undocumented expenses. Besides, with the $75 dollar threshold, how many restaurants/meals can you NOT get a receipt from? or lose?

My bottom line is this....whatever the policy one adopts, per Diem or itemized or hybrid (whichever is easier to manage or works) or whatever system you adopt.... the culture/policy should be of honesty and not deceit or pulling one over the company because of the "requirement".

The tone and type of employee and employer relationship is more important to me. In a lot of ways.....CULTURE TRUMPS CONTROLS. Culture is your first defense...Controls is only your second.

But that is just me!

Anonymous
(AAII) |

All employees who travel are issued purchasing cards which they use for all travel expenses. Employees are instructed to ask for a itemzied receipt along with the merchant receipt. I use my personal credit card for most purchase transactions in in 99% of the time I am given an itemized receipt (you would want that to make sure you bill is correct, wouldn't you?). If an employee fails to get a receipt, they are required to fill out a notarized affidavit. Our travel vouchers are scruntized to make sure all expenses are legit and that the receipt are appropriate. With requiring purchase cards for traveling, this eliminates any fradulant activity. At least we hope.

To the gentlement who used a standard books of receipts for a missing receipt....this would be an absolute no go in on organization. When you travel on company business, it is your responsibility to follow the rules. We suggest to travelers that they take a manila envelope with them to place all their receipts in.

Gonzalo Mendez
Title: COO -
Company: Operadora Turistica del Sur S.A.
(COO - , Operadora Turistica del Sur S.A.) |

Loose policies cost more than money. Picture this: your star salesman is found to have cheated on his ER and then according to policy you fire him and the company loses a top revenue getter.
The culture of the organization should be such that it would be inconceivable for an employee to even consider cheating on his/her business expense claims. And then set policies and procedures that make it difficult to cheat.

Ken Mason
Title: Controller
Company: Pascua Yaqui Tribe
LinkedIn Profile
(Controller, Pascua Yaqui Tribe) |

I had an employee who was suspended for one day under progressive discipline. Her supervisor, who was also her good friend outside of work, was going through her desk looking for something and came across a suspicious-looking hotel receipt. To her credit, she kept digging, found the original altered receipt(!) and promptly reported it to me. I immediately contacted HR, who concurred with my recommendation to terminate the fraudster. I handled that first thing the next morning (with a witness) but we did not cut a final check pending research into how much she owed the employer for any other fraud. After a quick but pretty thorough investigation, we found another altered receipt and a number of outstanding travel advances for which she had not prepared the required expense close-out report. Some trips were known to have been cancelled. All told, she owed the employer far more than her final check. I never learnt the final outcome, as my assignment ended soon after.

One important lesson is the need for rigorous tracking and follow-up of travel advances, which can easily get out of control. In fact, I am minded to include travel advances as a category when we do our planned implementation of the accounts receivable module in our accounting software, as it is very difficult to manage through the general ledger.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

In NY, back in the old days, one could deduct amounts such as this from a paycheck. Under the new rules, as I understand them, it is no longer possible.

This creates a really sticky wicket.

On the flip side, in CA, you must have a check cut and ready on the last day of an employees employment otherwise fines and the wrath of Sacramento rains down upon you.

What the States/Feds are telling you is that what could have been settled without involving lawyers, judges and law enforcement (called settle and pass the buck) is now no longer the case.

In many respects, that's a loosing proposition for all involved.

Topic Expert
Scott MacDonald
Title: President/Owner
Company: AlphaMac Resources, Inc.
(President/Owner, AlphaMac Resources, Inc.) |

First, if you use Per Diem reimbursement you don't have to worry about meals and incidentals, and you don't have your accounting clerk chasing a $6 McDonald's receipt.

Requiring the employee to book hotels, airline and rental cars through a travel agency can cut down some on the fraud especially for airfare tickets, as unused tickets are tracked. One additional way is to require employees to use a company credit card so that the expense can be confirmed.

Outside of that, it is difficult to find every instance. One company I worked for, the dates on a hotel receipt didn't make sense and and accounting clerk called the Hotel to get some clarification. Turns out the guy was sleeping in his car and making fraudulent receipts on his computer. He had a drug habit and was using the money to finance his vice.

You will never completely stop fraud in T&E.

Anonymous
(PM) |

Fake expenses or hotel Receipts.
How can you track or investigate fake or cancelled hotel receipts?
For example, an employee is booking a hotel, getting a genuine receipt with itinerary number from orbitz or expedia apps then cancelling the hotel for a refund?
please advise

Patrick Mugalu
Title: CEO
Company: MSP Global
(CEO, MSP Global) |

Thinking about an MBA research problem and thinking about Financial Accountability behavior of staff in NGOs - I don't seem to be finding another clearly refined variable here. Can some one help?

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