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Companies aren't doing enough to crack down on expense fraud, new research claims.
Laura Cameron, CFO Europe Magazine
April 7, 2008
Even more astounding than employees who claim items such as lap dancers and cat food as business expenses is that most employers approve them.
Around 12% of employee expenses fall outside of corporate policy, though managers reject only 0.5% of claims, according to a report from expense management provider GlobalExpense. The report draws on nearly 5m individual expenses claimed by 100,000 UK-based employees from 140 companies over the past three years. In 2007, UK-based firms doled out £1 billion (€1.3 billion) for false and out-of-policy expenses.
Nearly a quarter of hotel bills claimed did not comply with company policy, according to GlobalExpense. One such claim was for new lingerie after an employee "lost" hers on a business trip. One in six entertainment claims, meanwhile, also fails to comply with policy. Examples of irregular expenses in this category include the purchase of 20 bibles, and a betting slip submitted as a receipt.
David Vine, managing director of GlobalExpense, calls expense management "the Achilles' heel" of companies, which overlook stricter control of claims even though, after salaries, T&E is often the second-largest category of controllable costs. Besides "throwing away money," signing off dubious claims can also damage a company's reputation, he notes.
According to research by polling firm YouGov, 30% of British employees admit to having "fiddled" expense claims in the past. If the lax management of employee expenses continues, it will be directors — and shareholders — who will be red in the face.