Confronting an employee about expense fraud is never easy, but it’s a serious issue that needs addressing. It can be awkward and uncomfortable, leaving you wondering how to handle the situation effectively.
Do you know what to do when you catch an employee with their hand in the cookie jar? Are you ready to learn how to confront an employee about expense fraud?
Here we go.
Why would your employee want to commit expense fraud?
Before we get into the how to confront an employee about expense fraud, let’s have a think about the why.
There are many examples of business expense fraud. Here are some of the main reasons your employee might decide to commit it:
Financial gain
Your employee may want to increase their income by claiming false expenses. This can include submitting receipts for personal purchases or inflating costs on legitimate business expenses.
Appear productive
Some employees might fabricate expenses to make it seem like they’re busier or more productive than they actually are. This can be a way to justify their position or performance in the company.
For example, your employee might submit false travel expenses for meetings that never took place to give the impression of being heavily involved in projects.
Lack of respect for the company
When your employees feel undervalued or have grievances against the company, they might commit fraud as a form of retaliation or out of a sense of entitlement.
Accidental misunderstanding
In some cases, your employees might not fully understand the company’s expense policies. This can lead to unintentional fraud, where they claim expenses that they mistakenly believe are legitimate.
Before you confront your employee of expense fraud
Gather evidence
- Questionable receipts: collect all receipts that appear suspicious or inconsistent.
- Inflated receipts: identify receipts that seem excessively high or do not match typical expenses for similar items or services.
- Company handbook: have a copy of the company handbook that clearly outlines what constitutes legitimate business expenses and what doesn’t.
Verify the evidence
- Cross-check receipts: compare the questionable receipts with similar past expenses to identify any anomalies.
- Consult relevant policies: ensure the suspected fraudulent expenses clearly violate the company’s expense policies as stated in the handbook or the expense policy template.
- Seek expert opinion if needed: if unclear, consult with a finance or HR expert to verify the legitimacy of the receipts.
How to confront an employee about expense fraud
Expense fraud is a serious issue that can have a significant impact on your business. If you suspect that an employee has committed expense fraud, it’s crucial to address the situation promptly and professionally.
Here’s a step-by-step guide on how to confront an employee about expense fraud:
Step 1: Set up a meeting with your employee
Start by arranging a private meeting with the employee in question. Ensure that the setting is confidential and free from distractions. This creates a safe environment where the employee can speak openly.
Step 2: Explain the issue
Clearly explain the nature of the issue. Detail how the suspected fraud impacts the business financially and operationally. Make sure to outline how your employee’s actions are involved. Being transparent about the situation sets the stage for an honest conversation.
Step 3: Review the documentation
Present the receipts or other documentation that you consider fraudulent. Ask your employee to explain these records. Give them the opportunity to provide their side of the story and any context that might be relevant.
Step 4: Encourage justification
Encourage your employee to justify the situation. Listen attentively to their explanation. It’s important to remain open-minded and consider all information before making any judgments.
Step 5: Take appropriate action
Based on your employee’s response, decide on the next steps. If your employee is found guilty of committing fraud, consider the financial amount involved and the severity of the offence. Actions could range from a warning to termination, depending on the gravity of the situation.
Regain control over your spend with Capture Expense
Take control of your company’s expenses and prevent business expense fraud. Book a demo with Capture Expense today to ensure no fraudulent claims slip through and keep your spend aligned with your policies.