Lurking in the Shadows: Understanding and Preventing Expense Fraud

Expense Fraud

Lurking in the Shadows: Understanding and Preventing Expense Fraud

Hey there, financial warriors and business owners! Let’s dive into a topic that’s as sly as a fox in the accounting world – expense fraud. In this article, we’re setting out on a journey to uncover the layers of expense fraud, its varied forms, preventive measures, and how Moose Creek Bookkeeping can play the hero and catch those sneaky culprits, even when long-term projects with many players are involved.

Different Ways Expense Fraud Makes itself known:


Inflated Expenses: Dishonest employees inflate legitimate expenses to secure larger reimbursements than they are genuinely owed. Claiming that a $15 cab ride was a $100 limo ride, for example.

Fictitious Expenses: False expenses are fabricated out of thin air, and these fabricated claims are then submitted for reimbursement. Typically lacking a receipt.


Duplicate Expenses: Either by accident or in an attempt to game the system, the same expense is submitted multiple times, resulting in additional reimbursements.


Personal Expenses Camouflaged as Business Costs: Mixing personal expenses with legitimate business expenses, attempting to slip these personal costs through the approval process.


Mischaracterized Expenses: Employees mislabel expenses, making them seem like valid business costs when they are not.


All of the examples above can put your business in hot water with the IRS in the event of the dreaded audit, and businesses that have more suspicious behavior are more likely to be audited. Let’s talk about how Moose Creek Bookkeeping can keep your business in the clear when it comes to Expense Fraud. Remember, the larger the project, the more opportunity for fraud to occur so as your business grows, it becomes more and more important to seek professional guidance when it comes to accounting. Moose Creek Bookkeeping will help reconcile and prevent any past or future fraud. Here’s how we accomplish that:


Airtight Expense Policies: Develop clear and comprehensive expense policies that leave no room for ambiguity. Employees must have a solid understanding of what qualifies as a legitimate business expense.

Mandatory Receipts: Implement a strict receipt submission policy for every expense claim. No receipt, No reimbursement. Period.

Rigorous Audits: Conduct regular (and surprise) audits of expense reports to detect any red flags.

Managerial Scrutiny: Institute a two-tier review system where both the employee and their manager review and approve the expenses.


Automation for Accuracy: Leverage digital detectives in the form of software to automatically flag unusual patterns.

Training and Education: Continually educate your employees about the expense policy, its significance, and the potential consequences of fraudulent activities. Awareness is key.


Whistleblower Channels: Establish a confidential channel for employees to report suspicious activities without fear of retaliation.

As you can see, expense fraud is an adversary that can jeopardize a business’s financial stability and reputation. However, armed with knowledge, vigilance, and the right tools, businesses can take decisive steps to prevent and detect fraud. Collaborating with experts like Moose Creek Bookkeeping ensures that even in the murky landscape of contractors and large-scale projects, financial transparency remains paramount. Remember, the path to a fraud-resistant future begins with a commitment to honesty, awareness, and RECEIPTS!


Please give us a call to schedule a free discovery call.