Bosses more likely to commit expense fraud

You might want to start paying more attention to your expense claims, as the tiniest mistake might lead to your employees accusing you of committing expense reimbursement fraud.

According to a recent Association of Certified Fraud Examiners (ACFE)  survey, employees residing in the "executive/upper management" department of an organisation accounted for 27% of expense reimbursement fraud cases.

ACFE examined 1,483 cases of occupational fraud in more than 100 countries, as reported by certified fraud examiners who investigated the cases between October and December 2013.

Expense reimbursement accounted for 13.8% of asset misappropriation fraud cases, representing an average loss of US$30,000 per case, and included such incidents as mischaracterised, overstated and fictitious expenses, as well as multiple reimbursements.

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“Authority tends to be strongly correlated with loss because high-level fraudsters generally have greater access to organisational assets and are better able to evade or override controls than lower-level employees,” the report stated.

It also found because higher-level fraudsters are typically in a better position to circumvent controls, it generally takes longer for victim organisations to detect these schemes.

While the typical fraud committed by an average employee lasted one year before it is detected, frauds involving owners/executives lasted a median of two years before the perpetrators were caught.

In contrast, frauds committed by managers were found to have a median duration of 18 months.

In addition, while owners and executives accounted for only 19% of all occupational fraud cases, each case incurred an average loss of $500,000—seven times greater than those committed by employee-level perpetrators, who accounted for 42% of cases but only caused an average loss of $75,000.

Owner and executive committed fraud also led to a cost four times higher than average losses in cases perpetrated by lower-level managers ($130,000).

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