Expense Report Abuse

How to cut T&E fraud with better travel and expense management

In Business travel, Spend management by Heather Lohmann15 Comments

Earlier this year, former New York State Assemblyman William Boyland Jr. was sentenced for crimes that included reporting tens of thousands of dollars in fraudulent travel expenses.

Bobbie Jean Donnelly, office manager at a Los Angeles fashion company, pilfered $275,000 over two years, while wearing the shoes, scarves, and other clothing she inappropriately expensed to work.

And Tracy Bowen siphoned off half a million from her nonprofit employer by submitting fraudulent expense vouchers.

These high-profile criminal cases have this in common: Ineffective travel and expense management allowed felony-level T&E fraud to go on for years.

No leader wants to believe employees would take advantage of a company’s travel policy, but that is exactly what does happen—to the tune of a cool billion dollars per year nationally. Beyond scheming fraudsters, non-compliant travel by well-meaning employees takes resources away from the bottom line, crippling organizations across industries.

Want to reclaim your share of $1 billion? Here are 10 tips for improving your corporate travel management to reduce T&E fraud and noncompliant spend.

  1. Document travel policy with clearly outlined T&E practices

An effective expense management policy should clearly delineate business and personal expenses. It should also lay out a step-by-step process for submitting reports, including out-of-policy expenses. When your policy is clear, you do away with the possibility of excuses like “I didn’t realize this wasn’t covered!” from rogue T&E spenders like William Boyland Jr.

  1. Educate employees about your travel and expense management policy

Don’t assume employees fully understand your travel and expense management practices. Instead, hold policy adherence checks to make sure travelers know how to remain compliant. Make educating new-hires about T&E part of onboarding.

  1. Hold expense managers accountable

With much T&E fraud, expense managers either know about it or miss warning signs after inappropriately allowing another person to approve receipts. Bobbie Jean Donnelly, for example, approved many duplicate expense reports that allowed her and her co-workers to steal thousands. Dictate who can sign off on expenses, and take action if review is inappropriately delegated.

  1. Adopt a corporate travel booking system for flights, hotels, and chauffeured transportation

Forcing employees to book their own travel without the benefit of comprehensive T&E software opens the process up to fraud. Meanwhile, using a corporate travel booking system allows employees to instantly identify preferred rates that have been negotiated with vendors, making compliance easy.

  1. Automate expense reporting to identify suspicious expenses

Much of T&E fraud occurs when employees falsify reports or submit expenses more than once. Integrated back-end expense management can help stop this form of T&E abuse, immediately flagging suspicious expenses like those that allowed Tracy Bowen to filch $500,000 from her employer.

  1. Provide employees with tools for accurately capturing expenses in the field

Many a fraudulent T&E claim has resulted from a “lost” receipt. Whether an employee is looking to game the system or legitimately lost the documentation, this is an area where T&E fraud is rampant. Equipping travelers with tools for mobile receipt capture eliminates one excuse for misreported expenses. With such accountability tools in place, you eliminate the frequency of missing receipts and make it easier for approvers to detect fabricated expenses like those submitted by William Boyland Jr.

  1. Establish descriptive travel categories

One way travelers violate policy is by miscategorizing personal expenses as business costs. They may place the inappropriate expense under a miscellaneous category to hide their fraud. Having a full range of T&E categories can help offset this practice.

  1. Run regular audits on T&E spend

It’s critical to use regular T&E audits to identify troubling trends. Taking a long-term view of travel expenses can allow you to identify spending irregularities. For example, if one of your biggest annual spenders isn’t among the most frequent travelers, there may be a problem. This type of audit raised the red flag that ultimately put an end to Bobbie Jean Donnelly’s theft.

  1. Don’t rely on employees to report fraud

Encouraging your employees to tattle on their coworkers (who are oftentimes also considered friends) fosters a sense of distrust within the office, eroding away the company culture you’ve worked so hard to build. By employing modern T&E management software, you can automatically identify suspicious activity so that you don’t need to rely on a Big Brother system to catch fraudsters.

  1. Make T&E compliance part of your code of conduct policy

Include provisions in your code of conduct policy that address fraud. Demonstrate that T&E compliance is a serious priority for the organization, and that it will be applied evenly across the workforce – i.e., no rubber stamped reports for “honest” employees.  With more scrutiny, Tracy Bowen’s theft may not have escaped detection for four years.

T&E is typically one of a company’s largest costs. Why wouldn’t you want to take steps to discover what gains are possible for your organization with the right corporate travel management practices?

Making it clear through your T&E policy that the organization is serious about fraud can itself help to deter theft. Get in touch with one of our T&E management experts to learn more about how to take these steps and increase compliance.

How much of that $1 billion could your company save?

About the Author
Heather Lohmann

Heather Lohmann


Heather Lohmann is a Content Marketing Manager at Deem and has been working in the SF tech industry for over 4 years. She received a bachelor's degree from CSULB and an MFA in creative writing from the California College of the Arts.