Employee Reimbursement Audit – Checklist & Pointers

Employee reimbursement is one of the most common frauds noted in large organizations where the need for the business personnel to travel is high or if there are frequent business meetings with the client. Let’s face the truth, at some point, even you would have dipped your hands in this, but you just weren’t greedy enough to get caught.

Some of the key objectives in employee reimbursement are:

• evaluating the effectiveness and efficiency of the employee expense reimbursement process and compliance with established policies, procedures, and guidelines.
• assuring employee expense reimbursement documentation/files are properly maintained and retained.
• assuring requested reimbursements are accurate, approved, and paid/accounted for correctly.
• assuring requested reimbursement requests only reflects allowable and approved purchase transactions, while evaluating transactions for potential fraud, waste, and abuse.

Some key pointers to keep in mind while auditing:

• Take out the employee attendance (Biometric preferable) register, check if the employee was at the office or was on leave as per records while they claimed the travel reimbursement.
• Is it possible for the employee to submit bills for travel without travelling? Is it possible to cancel the ticket after it is booked?
• Check the serial numbers on the Hotel invoices/restaurant invoices. If the serial number is chronologically decreasing whereas the date of the stay is ahead, it is quite possible for the employee prepared the bills.

• Once you have identified this, call up the hotel to check if the employee stayed on those dates.
• Non-bill items usually have a cap, if organization has not defined it, look out for employees that claim the most under this category
• Alcohol billed as food: Most times the restaurants provide food bills of some other table who probably wouldn’t have claimed it. We can check this with two bills on the same date with different serial number and time. Also, the amount claimed can be checked with the number of persons who had the meal, the average would be on the higher side.
• Mileage based reimbursements for bikes & cars can be checked with the start & destination points distance on the maps and check if the quoted distance is matching.
• They will usually submit telephone bills with call logs. Check if they made majority calls to a single number and verify if that number is that of a client.

These are general pointers, many of these reimbursement cases are unique. As people evolve, they learn to do the fraud in different ways, so it is important for the auditor also to evolve along with it. Keep your eye open, and you will always find a reimbursement fraud. Check out the reimbursement fraud story here.