Suppose that one of your clients recently caught an employee falsifying an expense report. The client fired the individual, but because the fraudulent amount was relatively small, the business decided not to prosecute. As far as your client is concerned, the case is closed.
Unfortunately, the same conditions that make it possible for one employee to cheat may enable others to submit false expense reports. Even small amounts can add up to big losses when several employees and multiple reports are involved.
There are as many ways to cheat on an expense account as there are employees willing to cheat. One of the most common methods is to mischaracterize expenses – using legitimate receipts for non business-related activities.