Are You a Scammer? Cheating on Corporate Expense Reports

You'd think that given the horrible job market, people wouldn't risk fudging their corporate expense reports. But I hear about people skimming a little off the top almost as often as I hear about people getting their hours or paychecks slashed these days.

Just this week, a human resources consultant told me about a manufacturing firm that hired her to get to the bottom of a communication rift between employees and management. What she found was a tangled web of employee expense fraud ranging from inflated expense reports to bogus office supply orders to doctored receipts for reimbursement.

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"One guy -- fairly high level -- was actually caught changing all the 0s on his receipts for reimbursement to 8s," she told me in an e-mail. "Can you believe that? He only made off with a couple hundred bucks. Not quite worth your job, is it?"

But don't just take my anecdotal word for it. According to a survey published in December 2008 by U.K. expense management provider GlobalExpense, 30 percent of adults in the U.K. viewed exaggerating expense claims as acceptable and 20 percent admitted to having done so themselves.

Add economic hardship and a belief that they won't get caught to the mix, and 13 percent of employees who regularly claim expenses say they're likely to pad their expense reports. (Curiously, the Association of Certified Fraud Examiners in Austin, Texas, reported in 2008 that fabricated or inflated expense reimbursement schemes accounted for 13 percent of all employee theft in the United States.)

"People feel bitter when they feel like they're not being well compensated or they're being overworked," said Cynthia Shapiro, author of "What Does Somebody Have to Do to Get a Job Around Here?" and "Corporate Confidential."

And bitterness can be a breeding ground for fudged expense reports and other forms of employee theft, experts said.

"This happens more in recessions because companies get rid of their checks and balances," Shapiro said. In other words, when the HR and accounting cats are away, the office mice will play.

Tough Economy Means Tougher Auditing

That's not to say nobody's minding the financial store in corporate America. Plenty of companies still maintain elaborate internal, external or automated auditing systems. Indeed, during a recession, many companies ramp up their auditing practices in an effort to identify and stamp out wasteful spending -- bad news for those who refuse to play by the expense report rules.

Curious about how these corporate cheaters get caught, I contacted a couple of auditing firms that work with Fortune 500 companies for their take on the matter. There were the obvious dumb goofs: claiming expenses from a day you didn't travel, consistently claiming a higher amount of expenses than your counterparts or rounding up hotel and restaurant bills to the nearest zero.

Then there were those bogus expense claims so outrageous, so brazen that they warrant a bit more discussion:

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"When you have a downturn in the economy, you tend to see more fraudulent use of company credit cards," said John Verver, a vice president of ACL Services, an audit technology firm in Vancouver, British Columbia, that serves a majority of Fortune 500 companies, the Big Four public accounting firms and hundreds of government agencies.

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