Occupational Frauds and Money Laundering

Mayur S. Joshi

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Billing Scheme

The most fundamental scheme of an overstated expense occurs when an employee doctors an invoice or other supporting documentation to reflect a higher cost than what he actually paid. The employee may use whiteout, a ballpoint pen, or some other method to change the price reflected on the receipt, before submitting his expense report.

If the company does not require original documents as support, the perpetrator generally attaches a copy of the receipt to his expense report. Alterations are usually less noticeable on a photocopy than on an original document. For precisely this reason, business should require original receipts and ink signatures on expense reports. As with other expense frauds, overstated expense schemes often succeed because of poor controls. 

In companies where supporting documents are not required, for example, fraudsters simply lie about how much they paid for a business expense. With no support available, it may be very difficult to disprove an employee’s false expense claims

Case Study

The Maharashtra government employee was on Tamilnadu tour for 6 days. He had taken a huge sum as an advance from his employer. In reality his expenses were very much lesser than the total advance. He was allowed the lodging and boarding expenses. He adopted a simple method to siphon out the advance. He purchased tea worth Rs.5 and get the bill written in Tamil language. Tamil, telgu, malyalam and Kannad are the languages, which are not easily understood by the people residing in rest of India and so the accountant and cashier of the employer company. He collected some bills, which were written in the tamil characters and simply added a small digit-2. The bill of five became worth of Rs.25.In this fashion he inflated his bills to utilize the total advance

 

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