Most people at least know someone who has padded his business expenses and filed for “creative” reimbursements on their expense accounts. In some cases, employers do not have much oversight. And in cases with which I have been familiar, often the employers don’t care or turn a blind eye, thinking it’s a better way to offer raises without having to pay the additional taxes and benefits. In fact, if anything, it’s a tax write-off.
Padding your business expenses can be regarded as a hallowed tradition with some employees. Having worked in show business for quite some time I have seen some real eye opening indulgences written off on expense accounts. Things that could be considered business friendly, if at all, in only the loosest interpretation.
According to an article in Fresh Business Thinking….”Ernst & Young’s Fraud Investigation & Disputes Services team has released research showing employees consider the fiddling of expenses as more serious than stealing physical company property (20%), drinking during work (13%) and breaching of licensing arrangements (10%). Only using drugs at work (33%) was considered the more serious of these offences.
Despite recent high profile prosecutions the research of 1000 middle managers found the exposure to risk remains high, with only one in five expressing zero-tolerance of intentional overstatement.”
So overstating business expenses is quite a consideration. The Ernst and Young Report reiterates what I noted earlier, that once upon a time, padding expense accounts was overlooked as a viable means of offering pay raises without dealing with the various taxes. But now, after the economic recession, the practice warrants greater scrutiny. Even middle level employees have been getting into the act, increasing their personal incomes through fraudulent business expenses.
It should be also be noted that larger amounts of money posted on expense accounts could indicate bribery and kickbacks. Bribery is embarrassing and, worse, illegal. All sorts of laws against it. Which is why it fails to brighten the day of any employer who discover, after the fact that its employees have been caught in a bribery scandal. When breaking headlines blast this type of malfeasance all across the various news media platforms, you can rest assured business will suffer.
Still, thirty six percent of the UK businessmen would overspend on their accounts if it meant developing new business.
Padding business expenses has always been a two way street, largely for the reasons cited. Largely, because nearly everybody is doing it. Only one in five respondents to the survey claimed they have a zero tolerance policy. And who knows if they are telling the truth? Twenty-five percent openly said they would tolerate over-billing on expenses as long as it is not out of control. And seven percent would accept claims that were more than $150.US dollars.
Now this survey was conducted in the UK. So the question is, are the employees with the UK companies more flagrant, or if there was a similar survey conducted in the United States would policies toward expense padding be more liberal or more constraining? I think you can figure out that one for yourself.