Expense report padders confess their secrets
February 11, 2009 by Carol KatarskyPosted in: Best practices, Communication, Fraud prevention, Hiring & training staff, Internal controls, Special report, T&E
It’s easier to catch T&E swindlers if you know why — and how — they do what they do. A recent survey by T&E Magazine got the real scoop from people who freely admit to having fudged their travel expenses in one way or another. Some of the findings may surprise you.
For starters, employees appear to be getting more honest. 83% said they were always totally honest on their expense reports. That’s up from just 70% in 2004.
Of those who admit to cheating, the amount they wrongfully claimed is down: 8% said they padded their expenses $100 or more — that figure was 34% in 2004. Another 32% said they padded expenses by $50 to $99.
Most travelers who admitted to cheating (66%) said they did so because being on the road cost them in ways that don’t fit on any expense report category. Another 30% said they routinely have to use personal money for business costs when traveling. Padding is their way of “righting” the books.
And 26% say taking a little extra cash is their way of being compensated for the hassles of being on the road. Only 4% said they cheat because they can. [Note: Respondents could pick more than one reason.]
While no one wants to have cheaters in their office, those “reasons” for padding expenses give you a good opportunity to make sure you don’t see any of it in the future. It indicates that people are less likely to inflate their expenses if they feel the company appreciates the hassles — and out-of-pocket expenses — of being on the road.
It’s a good reminder to periodically review your company’s T&E policies and guidelines. Making sure they’re still fair to your road warriors could end up saving you time and money, as well as improving employee morale.
What do you think: Do most traveling employees pad their expenses to right a perceived wrong? Or is that simply an attempt to justify stealing from the company?
And what’s the most egregious attempt at expense report padding you’ve seen? Share your stories in the comments.
Tags: Audits, Best practices, Communication, Controls, Cost cutting, Employee communication, Fraud prevention, T&E
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February 12th, 2009 at 12:18 pm
As a controller I review T&E reports.
The best cheaters put expenses from the same trip on different month submittal in order to hide the evidence of spousal/family travel. Look for rental car returns that don’t make sense given the flight schedules. When submitted in different reports, the alignment of dates is harder to connect. Breakfast meetings in restaurants that are unlikely places to conduct business are often good clues, especially at 8:00AM. An edict that business meetings/meals may be audited by contacting attendees can be enough of an incentive to be honest.
Another opportunity for savings is to insure fair reporting of personal mileage. Should an employee who lives equally between Plant A and Home Office B be reimbursed for traveling on ocasion to Plant A? Establish a policy for fair reporting of net mileage and insure that senior management leads by example.
February 12th, 2009 at 12:25 pm
I am amazed at how professional people with advanced degrees making good money could be such crooks – and stupid! Why would you risk getting fired for padding your expenses account for a few dollars. Look at former IL Gov. Balgo. He is now out of work for trying to sell Pres. Obama’s Senate seat. He certainly made more money before his stupid decision then he does now. Was it worth it?
Our policy for our non-profit organization is simple, all expenses must be turned in if you want a reimbursement. If someone says he lost the receipt and it is under $25 I will forgive it. However, if it is over $25, then our Director of Operations must approve the reimbursement. It will only take one time of not reimburseing someone’s expense without a receipt for it to NEVER happen again.
February 12th, 2009 at 12:44 pm
At a previous company, we had a marketing manager who made arrangements with one of our reps in Florida to pick him up at the airport, leading our rep to believe that they’d be working together that day. Instead, the manager had our rep drop him at a local country club- then he told our rep that he’d be using the rep’s name on his dinner receipt that night. Needless to say, the rep was PO’ed for having his time wasted as a personal chauffer, so he told his manager about it and the company patiently waited for the expense report from the manager. As expected, they got an expense report that included the rep’s name, and immediately fired the manager. He lost his $80,000 job for a $53 dinner.
February 12th, 2009 at 1:31 pm
Perhaps the most important part of this is the concept of leading from the top. If the top managers/executives are padding their expenses, then it sets the tone for everyone else. Our CEO had to repay $9,000 of expenses and was not released. While it set the example of personal expenses not being okay to charge to the company, it also said that you wouldn’t have to pay the ultimate price – just repay and apologize. Sound like certain Senators/Congressmen these days? This then just puts the burden on the fiscal folks to be the bad guys monitoring EVERYTHING. not the best approach…
February 12th, 2009 at 1:40 pm
What about sales managers who insist they need to buy alcohol for potential and current customers and refuse to provide a detailed restaurant receipt? The CEO sees nothing wrong with this reimbursement. But employee bonuses are figured by EBIDA. Is there a policy recommendation about reimbursement for alcohol consumption by employees?
February 12th, 2009 at 1:54 pm
Our policy is absolutely not.
February 12th, 2009 at 2:29 pm
Our most bold (and stupid) employee attempt at padding his expense report was to log EVERYWHERE he went as 60 miles…it never varied…if it was 5 miles or 15 miles he always reported 60 miles…he was busted of course and reprimanded, but still has his job.
February 12th, 2009 at 3:16 pm
Dana is correct that leading from the top is the most important aspect to keeping expense reports honest. I had a boss, an attorney, who turned in each meal as costing $24.99 because $25 meals required a receipt.
My best story is a salesman who paid the difference in hotel rates to bring his spouse along but her fur coat was stolen from the hotel room. After denying the expense on his report, his expense reports from then on were higher. I asked him if he was padding his expenses reports to get the cost of the fur coat returned. He said, ‘every hair of it’.
February 12th, 2009 at 3:58 pm
Darrel, that’s an amazing story. Not only that he expected to be reimbursed for a non-employee’s personal items, but that he so freely admitted it. How did you resolve it?
February 12th, 2009 at 4:45 pm
I have long been against reimbursing employees for alcohol consumption. No one is forcing them to drink as a job requirement. What if the employee or client has an accident after leaving and the company paid for the alcohol? Does t his leave your company open for a lawsuit? Alcohol and business just aren’t a good mix in my book.
February 12th, 2009 at 4:48 pm
Under $3 no receipt here so they put $3 $3 $3 everyday for lunch or breakfast whether they have it or not
February 12th, 2009 at 5:26 pm
We require receipts for everything. If an employee is missing a receipt, a “missing receipt” slip can be used for expenses up to $25, but require supervisor sign-off. If applicable, appearance of abuse of this policy is reported to Accounting.
Regarding alcohol, we allow up to 2 alcoholic beverages WITH a meal. No alchohol-only receipts. We also require a detailed receipt. We no longer allow the credit-card only receipt where we cannot tell if it’s truly a meal or really just a bunch of alcohol. Practically ever restaurant has computerized systems and if people say the detailed receipt wasn’t available yet they produce a credit card slip that clearly matches that of a restaurant with detailed receipts/a computerized system, we call their bluff and do not reimburse. It’s tough to implement, but it works. Suddenly everyone seems to bring back those detailed receipts they insisted weren’t available.
If they are sales reps that insist they needed to entertain the client/potential client with alcohol, we require the client, the client’s name (individual(s)), a detailed receipt (showing 1 of this, 1 of that) and supervisor approval.
Finally, regarding splitting trip receipts between expense reports to throw off duplications/abuse, we require all expenses to be submitted to Accounting within 30 days of the receipt date. That way, only receipts submitted within the last 30 days need to be reviewed by Accounting for duplicates or purposesly separated (on two reports) related receipts (same trip).
February 12th, 2009 at 5:50 pm
I think establishing set policies and procedures for expense reporting are a critical part of a sound accounting system. We have a fully accountable plan with the requirement of expense report submittal within 5 business days of travel with all original receipts unless meals are reimbursed based on per diem (depends on the contract). All travel costs are reported on one report. No subsequent submittals are allowed. If not submitted within the 5 business days, they jeopardize their entire reimbursement. Mileage is justified by mapquest reports which gives addresses for justifications. Meal receipts require full detail receipts with credit card proof of payment as well, who attended and brief business purpose. No ticket, no $. Metro fares and parking now require receipts due to company paid pre-tax transportation benefits.
Insufficient information and explanations of costs only hold up reimbursement. Never accept copies, otherwise they resubmit multiple times and you have to catch it. Like Paul said, I may understand an occasional lost receipt for small dollars on a taxi, but stress this is a one timer. Watch out for last month’s travel cost left on the expense report and not removed. Their choice not to remove it may be a means to benefit if not caught. Have more than one person review the expense reports. You would be surprised to know how many errors get missed when there are a lot of reimbursements flowing through the system and only one person reviewing them.
Keep PROFESSIONAL SKEPTISISM in your mind.
February 12th, 2009 at 5:55 pm
As a Corporate Controller coming up the ranks I’ve seen my share of falsifications including meals for family members, business trips that morphed into ski vacations, even requests for reimbursements for trips to a local strip club under the guise of “mentoring sessions”. It is amazing what people will do risking their job, and maybe even career for a few bucks on an expense report. Now in charge of setting corporate finance policy I see much less of this, but still have the occassional odd ball item come to me. Subscriptions to an industry journal (JOA lets say) is ok. Subscriptions to an advanced Linked In setting is not. Receipt duplication on reports that span a longer period of time between submission are difficult to catch unless you have a robust system that will flag such potential duplicates. But over the years, I think the best approach to identifying padders or keeping them from gettng away with it is:
- Have a policy that covers acceptable and unacceptable/non reimbursable items
- Revise the policy annually to incorporate changes in business……are additional bag fees reimbursable with most airlines now charging for such?
- Establish windows 30/60/90 days for submitting business expenses to reduce the possibility of duplicates being submitted for the same trip
- Require original receipts. Do not accept copies
- Keep a watch list for employees (and their Managers) that seem to walk a fine line, lose receipts, consistently, are excessive tippers, or submit expenses well after their incurred date
- Consider requiring meal receipts with the meal details (the version with the by entree, beverage, dessert) to review for excessive alcohol consumption or better yet, eliminate alcohol from the list of reimbursable expenses
February 12th, 2009 at 5:58 pm
I would quickly and effectively (through not reimbursing them) inform them that the company does not pay a per diem and that the submission of $3/day was obviously an attempt to receive compensation in a per diem manner. I’d also require receipts for that employee going forward no matter the threshold stated in the T&E Policy.
February 12th, 2009 at 6:19 pm
We had to start requiring employees to provide original “itemized” receipts and not the second reciept which just shows the total. We had some employees provide the total receipt for reimbursement and then a month later find the itemized receipt and turn that in thinking they hadn’t been reimbursed for it yet.
February 12th, 2009 at 6:46 pm
Had a two-week international assignment. Drove my personal vehicle, saving the company the cost of airfare and/or rental car. Brought some non-perishable food items with me, to save on breakfast and snacks. On the weekend, I went to the nearby zoo one day, a theme park the other. I didn’t expense the zoo or theme park gate charges, but I did expense the parking fees. My manager redlined them. He saw the parking fees as directly attached to my unreimbursable personal leisure activities. Asked me to resubmit my expense report without frivolous expenses on the weekends.
Darned if, during my revision, I didn’t suddenly develop simultaneous selective amnesia with respect to having brought breakfast foods and false memory syndrome concerning having eaten breakfast in some nice restaurants during those two weeks! And what a coincidence that the final result wound up being several dollars more than the original, by just about the cost of a zoo and theme park admission! Bet no one could have seen that coming.
Treat your traveling associates right, and they’ll… well, I guess to be honest, most of ‘em will try to screw ya anyway, but there are certainly some of us who, if you treat us right, will return the favor. But if you try to squeeze us, we’re going to squeeze right back.
February 13th, 2009 at 1:19 am
How do you sleep at night? Oh, let me guess, in a down comforter provided through your false expense report filings. I was shocked with your overconfidence that you know more than the next person and would just figure your way around the rules. Your overconfidence is what will eventually lead you to making a mistake, a duplicate, a wrong time/day entered on a report, and when you do, someone who takes their job seriously is going to take yours right from underneath you. Good luck “sticking it to the man”. You should back up and think about justifying why you did this in the first place. You submitted a non-business related expense (parking at a theme park) of course it should have been rejected. And, of course you didn’t submit the zoo or theme park gate fees……………………obviously NOT reimbursable. The rejection pissed you off and you wanted to get even so you basically falsified your report. Whether you think it or not your propably under the microscope due to your own actions. Ultimately the busienss will squeeze the hardest when you are sent packing.
February 26th, 2009 at 2:11 pm
@Michael G: I saved the company several hundred dollars by driving a personal vehicle instead of flying and renting a car. I saved ‘em another hundred or so by bringing my own breakfast food. And if I had driven to a reasonably priced restaurant for dinner, and had to pay to park there–not unusual in many metro areas–the company would have paid that with no questions asked. But because I made the mistake of identifying where I was parked, my manager picked up his Big Red Pen and objected to about $15 worth of parking expenses.
When I redid the expense report with the creative accounting, the difference was less than $50, which was still quite a bargain for the company in light of what reasonable and customary expenses could have been for that trip. I sleep just fine at night, Mike. Thanks for your concern.
Now you tell me just why a very small parking expense on the weekend should (of course!) be rejected. Because the destination wasn’t business-related? I beg to differ. The company sent me away from hearth and home for two weeks. I was there over the weekend because the company wanted me there. Not to transact business on the weekend; just because driving home and back for the weekend would have cost $0.22 per mile and I wouldn’t have been well rested for Monday morning. That makes my presence in the remote city “business-related,” doesn’t it?
Look at it this way: If I had gone into the city for dinner and paid a flat $6 to park, and had dinner, then went back to the hotel, the company would have paid for both dinner and parking. But according to your reasoning, if I parked in that same lot, paid the same $6, went to an orchestra concert, then grabbed dinner and went back to the hotel, my act of attending a concert somehow makes that parking fee non-reimbursable, even though I didn’t ask for reimbursement of the concert ticket. Express all the moral outrage you want; there is no way for you to rationalize away the manager’s wrongness for rejecting the parking.
Of course, that doesn’t make my subsequent creative accounting OK. I was wrong to do it, and I admit it. My point was simply to note that not all cheating is one-sided, and a business might be smart to examine its rules if it experiences rampant expense report inflation. But your sanctimony and judgment are way over the top for something like this. I might well inquire how you can sleep at night, knowing that you’re screwing your associates out of reasonable travel expense reimbursements on the basis of trumped up rules that don’t stand the test of rational analysis.
Oh, and yes, I do sleep under a nice down comforter, as a matter of fact. They’re almost a necessity in the winter up here in Sioux Falls. I highly recommend them. Just make sure you get an appropriate thickness–hard to believe, but if you get one that’s too thick, even when it’s -40° outside, you’ll still be too warm under the comforter! And just to ease your mind, I paid for the comforter with very legitimately earned salary.
March 4th, 2009 at 9:49 pm
Over the past 4 years, when stopping off in downtown to drop or pick something up, I feed coins in the parking meter (instead of paying the minimum $8 first half-hour downtown parking lot rates). I am a manager, and don’t feel it necessary to get reimbursed for the meter expenses $0.35, and $0.15 every time I park. Furthermore, the parking meter never gives you a receipt.
I recently got a $50 parking ticket for not turning/cramping my tires against a curb when parking on an uphill slope. Please note my meter was not expired. Naturally, I am frustrated.
I want to turn in my parking violation and get reimbursed. Of course, parking violations are not a reimburseable item. After all, I am driving down there for business, I have never once expensed my 4-years of parking meter coins, and I believe I am doing the right thing to not have cost the company the $1,000+ of parking lot rates I “could” of parked at.
As an honest person who learns from mistakes, I am sure I will always turn my tires. However, I am disgruntled that I probably am eating the $50 ticket. Moreover, “just to be safe” I am thinking I’d now rather always park in the premium lots to never have this happen again where it is now out of my pocket. My assumption is the company won’t really recognize all savings from avioding the downtown parking lot cost that I have and am saving the company. I am curious if I should even attempt to turn in this ticket and debate its legitimacy. I do not want to sound childish saying “fine, I will always park in the lot then…”
Has any one else come across this situation as the accounting manager? Or as the person seeking reimbursement for a parking violation?
How do people normally get reimbursed for the dimes, quarters and nickels for parking meters that add up over years…?
March 5th, 2009 at 12:03 pm
Christina brings up an important point; Does a rigid policy on what is reimbursable punish the employee who has always tried to save the company money? As a reviewer of expense reports, I see ‘legal’ entries, such as petty items like the most expensive coffee item and pastry at Starbucks, that the person would not buy on their own time, or buying the most expensive meal they can find. The employee that eats at the restaurant (or parks at the meter parking) that typifies where they would go on their own budget should be praised and not punished when good intentions sometimes go a little wrong. Christina should be able to go to her manager and explain the circumstances and be compensated for the ticket, “by some method”. She has earned that right by fostering responsible, thrifty behavior. There may be a Rewards and Recognition petty cash fund to cover this situation. If you flatly deny certain employee expenses, the result is honest people will be inclined to pad their reports in other ways that are under the radar, such as expenses that do not require receipts, or mileage inflation between locations. The trouble is, when honest people (that have been burned) go down the path of minor padding of expense reports because they feel no other recourse, then learn that it is never challenged, it can become a habit. The key is to treat your employees fairly and they will be honest and open. Building trust and respect reaps big rewards, long term. Punish them and they will not respect the company and then will eat at the best restaurants and park in the closest lot, regardless of the cost.
March 5th, 2009 at 12:31 pm
Steve, I think that’s a great point. While having tight controls in place is obviously important, too much rigidity can make employees feel like they’re “forced” to stretch the truth in order to “break even.”
And I’ve heard many cases over the years of employees taking the more expensive option simply because it would be easier to document their expenses. Or because they felt cheap if they included legitimate, small, cash expenses. If the reimbursement system is run in such a way that employees feel like they are being put on the defensive, they are much more likely to do a little padding.
May 31st, 2009 at 8:08 pm
When I was in human resources, I was responsible for staffing consultants of all levels on projects globally. I had one senior manager with two young kids at home that I needed to zip off to Australia for a few weeks. He told me his corporate amex was suspended, and our travel policy required use of the amex. So I called Amex, and our expense people, to find out what was going on. Amex had suspended for lack of payment; expense was paying – so where was the $$ going? When I looked at his expense reports, I found the answer. Brooks Bros shirts, electronic equipment, camera… travel to San Francisco when his client was based in Chicago. I went no further, and contacted our internal audit department. Two weeks later, the manager, our practice leader and I met in New York and fired him. We also sued him for over $100k of misappropriated expenses. It was the biggest expense fraud my company ever had at that time, and I just stumbled across it trying to get this guy to Australia for a project!
Have reasonable T&E policies that apply to all. For anyone in New York, when can employees take a car or cab home? Don’t penalize employees who commute farther. Go to perdiem reimbursements for breakfast, lunch should be covered by the ee, and then actuals for dinner. Or just go straight to per diems. Let ee’s decide what hotel they stay at within a budget. And encourage use of a rental car rather than a personal car when travelling out of town.
June 27th, 2009 at 12:43 am
I travel very often for business, often short distances, and I have always felt slightly taken advantage of. We only get reimbursed 25 cents a mile and not gas reimbursements. If we don’t travel outside the county we work in, we cannot expense mileage or tolls at all. We have to bill our clients 50 cents a mile, and the comany keeps the differnece. It also take over three months to recieve a reimbursement check. I have always followed the travel policy strictly, and I am usually owed about 800 in expenses at all times.
I never let it bother me because I make a good salary, recieve fair recognition for accomplishments, and recieve raises often. When I started, the company was very small, and I have outlasted every member of our staff. I am now most senior person at the company besides the owners. The company has doubled in size since I have been there, and I have witnessed the company get burned on several occasions by employees. It usually goes through cycles. It seems like there is always one person who is trying to cheat of company, and when they get caught, one person in the next wave of new hires burns the company. They burned the company several ways. Either lying about credintials, what time they arrived and left work, taking several hour lunch breaks, ect. Because of just a few bad apples they have implemented a lot of policies that really are starting to grind my gears.
I took this job to work at a small company that didn’t breathe down your kneck as long as you were profitable employee. Because of being burned, they recently hired a woman who does not have a college degree or any formal training to start an HR department at a company where everyone but the secratary and her have degrees. She looks over weekly status reports, expense reports, time off request ect. She is extremely anal about things that she shouldn’t be, and she seems to put me under the microscope more than anyone else. Her first week she told the owners that at the end of the day and the begining of the day I talk to the other employees and make the company unproductive for about 10 minutes. This is true, but it is because i am thier supervisor, and while most of what i am saying to them is “water cooler talk”, I think it raises moral, commrodery (sp), and I do give assignments when we finish catching up. I basically got repremanded by my boss for wasting billable hours, even though I bill well over the company’s required minimum of 35 a week. I cut out all the nonsense talking, but she still was reporting that nothing had changed. She started mistaking team meetings for social gatherings. I explained it all to the owners, but they just take her side. I now do all correspondance via email, so I do not get falsely accused of idle chatter.
Since that date there have been a number of other changes and accusation of people doing small things that cost the company money. I am very meticulous for following the rules and have done what the owners have asked, but I have also been keeping records of when excessive repremanding by HR for non serious violations or non violations occure.
Recently I took a hour and half lunch, which is perfectly acceptable as long as make up the extra time at the end of day. The next week when I was working in the field, I recived a very threatening and mean spirited email from our HR lady with talk of punishment and docking my pay for the extended lunch. I told her to recheck my office log to verify I worked 8 hours. She refused to check it because she said she already had. I asked her to double check it, and she said she had already done that as well. At this point, I started get nervous that someone had doctored the log, or that I mistakenly logged out of the office at 5 out of habit. I told I understood, and if i made the mistake i would pay the consequences, but I wanted a copy of the log on my desk when I returned, and I wanted to review the original. Suddenly, everything was cleared up, and she reviewed it a “third time” and found that I had infact worked my 8 hours. I went to owners of the company about the situation, and made my case that we were being treated like children and it was causing moral to drop, people to start seeking other jobs, and people starting to do just the bare minimum. The ownersdid take action, but it was not nearly what i had hoped for.
Because of all the recent changes, every little thing that the company does seems to irritate me including the mileage. I drove over 700 miles roundtrip to a recent project. I got 25 cents a mile for my gas and wear and tear, and they recieved 25 cents a mile for nothing. I also do something I never did before; I participate in talk of how the company is screwing us with fellow employees.
Recently, I took another business trip, this time flying, and I did not rent a car because I did not want to wait three to be reimbursed for it, and cabs are cheaper anyway. When I arrived at my hotel, I was pleasantly surprised that they had a complimentary shuttle, that could take me everywhere I needed to go. I used the shuttle most of the week, but one night stayed out at a bar (on my own dime of course) with a colleage past the last shuttle time. I took a cab home, and was got a reciept for reimbursement, since I ate dinner at the bar as well and would have needed transportaion home dinner whether i had stayed for drinks or not. The cab drive asked if i needed extra reciepts, and I asked what for. He said lots of businessmen who stay there use them to pad expense reports. They say they took cabs when they usually take shuttles. Before all the changes at the company, I would never have dreamed of taking advantage, but now I feel differently. I took the extra blank reciepts. I am planning on filling them out to make up for all the wear and tear on my vehicle i do not get reimbursed for. I do feel bad about it, but I would also feel like a sucker if I did not at least attempt to get some of my losses on my vehicle back.
I used to love the company, and I looked at their success as my success. I not longer feel that way. I feel they owners are getting too greedy, and for the first time, I feel like it is us vs. them. It is a sad day, and I hope I find a new job soon.