Expense Reimbursement Schemes in the Professional Services Industry

According to the 2018 ACFE Report to the Nations on Occupational Fraud and Abuse, the median loss from occupational fraud costs the professional services industry $258,000. The most common scheme surrounds expense reimbursements.

An expense reimbursement scheme occurs when an employee files a claim for reimbursement of fictitious and/or inflated business expenses, based on false documents. Employees can either mischaracterize expenses, overstate expense reports, seek reimbursement for fictitious expenses or submit multiple reimbursement requests. Fraud perpetrators accomplish this in a variety of ways:

• Alter actual receipts
• Overpurchase business expenses
• Overstate another employee’s expenses
• Produce fictitious receipts
• Obtain blank receipts from vendors
• Claim the expenses of others

What can you do to detect and prevent expense reimbursement schemes?

• Review and analyze expense accounts by comparing current expenses to historical or budgeted expenses.
• Perform a detailed review of employee expense reimbursements, which may include a review of employees’ schedules.
• Require employees to submit detailed receipts or other supporting documentation and provide an explanation of expenses before payment is reimbursed.
• Periodically review employee expense reimbursements.
• Understand the travel and entertainment policy of the company.

If you have any questions regarding expense reimbursement schemes, feel free to contact us at [email protected]