Bosses warned to watch expenses fraud
YORKSHIRE managers are being warned that manipulating expenses is not the sole preserve of MPs and to keep an eye out for expenses-related fraud.
Chris Clements, a forensic partner at the Leeds office of accountants Grant Thornton is warning that employees from middle management to the shop floor have been known to embellish expense claims – and instances are on the rise.
Among recent example of expenses fraud seen by the Grant Thornton team including amending handwritten receipts in inflate claims, management paying bonuses as “expenses” to avoid tax, and claiming for hotel bills, overnight allowances and mileage when actually working close to home.
Other instances included submitting petrol receipts when already provided with a company car, using a company van to carry out private cash in hand business, then claiming expenses and overtime on top.
“Three key elements have to be in place for a fraud to occur,” Mr Clements said.
“Firstly there has to be opportunity. You wouldn’t leave your wallet or purse lying around so why have systems in place that allow a fraudster to sign off his of her own expenses?”
He continued: “Secondly, there has to be an element of rationalisation – justifying the crime by saying that everyone is doing it.
“Finally, there has to be motive, Classic examples are paying off gambling debts or a drugs problem, but it could just as easily be simple financial pressure in the current environment.”
Mr Clement said that the retail approach to prosecuting shoplifters should be adopted by business.
“Whether it is simple theft of paper from the photocopier, to systematic overstatement of mileage or excessive claims for accommodation, every business must take a zero tolerance to fraud, whether it’s committed by the managing director or the cleaner,” he added.
Rob Rode, partner at Leeds-based law firm Clarion and fraud specialist, said the recession was making firms scrutinise everything.
“Those that are still fool hardy enough to continue fraudulent practice will be caught out in the end and could end up in court,” he said.
“Most of the instances mentioned are all fraud on the employer and so are a criminal offence.”
He continued: “Employers have three options if they have reason to suspect a member of staff from having a quite word, to dismissal and prosecution. However, in any event we would strongly advise employers to seek advice before taking any action.”
