Craig L. Greene, CFE, CPA, of founding partner of McGovern & Greene LLP offers this advice on preventing mileage reimbursement fraud. More info on corporate travel fraud can be found at the firm’s web site, www.mcgoverngreene.com.
Automobile Mileage Reimbursement Fraud When a corporation calls for employees to use their privately owned automobiles to conduct company business, its control over employees and their activities becomes limited.The odometer mileage shown on a claim form, even when called for, cannot be relied on because the automobile does not belong to the company; nor does the company share liability or responsibility for the car. The owner can use the car as wanted even on a business trip although he or she is not authorized to claim mileage for personal activities.Verify Reimbursable Mileage ClaimsRun a pattern of mileage on each person, going back in the records at least three years. Look for dramatic or gradual increases in the mileage those employees claimed. Normally, employees will take vacations. When they do, a temporary company representative will often service their territory. The key to detecting fraudulent mileage reimbursement claims revolves around patterns. For example, you need to:1. Check the mileage claimed by that temporary person compared to the same circuit filed by the person you are auditing. When they differ significantly, you might have a clue to systematic fraud. 2. Review personnel vacation files. When a person does not take any vacations for long periods, or takes short vacations over holidays when he or she knows no temporary person will travel his or her routes, you might have a clue to fraud. Review the personnel vacation files during your audit. 3. Do not jump to conclusions before you have all the facts. A dramatic or systematic increase in mileage might coincide with an increase in customers, customer development, or instructions from someone in authority. Solutions for Controlling Mileage Reimbursement FraudObtain corporate gasoline credit cards from each of the oil companies common in its travel area. Also require receipts for parking and toll fees with a note on the back showing the business relationship of the fee.