FinanceRegs.com » Fraud watch: Hidden dangers of reimbursements

Fraud watch: Hidden dangers of reimbursements

May 19, 2008 by Carol Katarsky
Posted in: Best practices, Fraud prevention, Fringe benefits, In this week's e-newsletter, Latest news & views

What’s the worst that can happen if you don’t segregate key Accounting duties?

You know the dangers of not having fresh eyes to double-check entries, approve expenses, etc. But a rogue co-worker could also subject your company to reimbursement fraud. Besides the hit to your company’s bottom line, it can also leave innocent colleagues holding the bag.

Reports are surfacing of Accounting staffers who are cutting checks for legitmate reasons (health claim reimbursements, paid time off, etc.) but then cashing the checks themselves. It’s most common when the employee who shouldget the check has been recently terminated or simply doesn’t understand which benefits he or she is entitled to.

Granted, most of your co-workers are honest, and this kind of scam is relatively rare. But it’s better to take away the temptation:

  • Separate duties so the person who approves a check isn’t the same one who cuts the check.
  • Audit accounts (and benefits programs) periodically to keep an eye on things. Ideally, make the audit schedule irregular, so it’s harder for any would-be crooks to cover their tracks.
  • Consider direct deposit for reimbursements so there are fewer chances for the funds to go awry.
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