1. 1 Expense Account Fraud Jennifer Sawayda Program Specialist Anderson School of Management University of New Mexico Albuquerque, NM © O.C. and Linda Ferrell

2. 2 First, Some Stats… 13.8% of fraud schemes involve expenses Common schemes involve padding expense accounts, using company expenses to purchase non-work-related items, and falsifying reimbursements 27% of expense reimbursement fraud committed by managers and/or supervisors Median loss for organizations that are victims of expense accounting fraud is $30,000

3. 3 Fraud Triangle Pressure OpportunityRationalization

4. 4 Examples of Expense Accounting Fraud Richie Farmer, former agriculture commissioner of Kentucky – Used state funds to pay for personal items – Sponsored a racing team owned by relative with $20K meant for a buy local initiative – Pocketed extra gifts for commissioners paid for by state funds Thomas Coughlin, former vice chair of Walmart board – Used company funds to pay for personal items, including a $2,590 dog enclosure – Misused Walmart cash, reimbursements, shopping cards Mark Hurd, former CEO of Hewlett-Packard – Misused $20K in company funds to pay for dates and hotel rooms with part-time employee

5. 5 Types of Common Expense Fraud Hotels – e.g. Placing a more expensive hotel on your expense account than where you actually stayed Meals – e.g. Asking for blank receipts and filling them out with false information Mileage – e.g. Using company car for personal use

6. 6 Types of Common Expense Fraud Gifts & Entertainment – e.g. Pocketing company-funded gifts meant for others Taxis and Rentals – e.g. Receiving a blank taxi receipt and falsifying the amount Company Accounts or Cards – e.g. Purchasing personal items with company credit card Air Travel – e.g. Canceling a flight but still submitting in expense reports

7. 7 Controls Companies Should Take Have clear policies and procedures on legitimate expenses and reimbursements Always request itemized receipts If necessary, double-check with the airline, hotel, etc. Random auditing of expense reports Clear disciplinary procedures for violations Tone at the top support and adherence to expense guidelines