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Outrageous Expenses

Helicopter ride you say? Some expense attempts border on hilarity. By Sheryl Nance-Nash | Summer 2016

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Rental homes, beef in bulk, toilet paper, new cars, doggie day spas, vacations, flat-screen TVs, loans, rents, medications, taxidermy, dance classes, a welder, somebody else’s salary.... Apparently some employees mistake “think outside the box" to mean “get creative with your expense reporting.”

Truth be told, the number of improper expense report requests shows little sign of declining. In fact, only 11 percent of executives said they saw a drop in inappropriate requests over the past few years in a recent Robert Half Management Resources survey.
 “These outlandish and sometimes funny examples shed light on what can be a serious problem for businesses. Inappropriate expense reports are costly—both to the company’s bottom line and to the careers of the people who submit them,” says Tim Hird, executive director of Robert Half.

We can’t tell you with any certainty how much outrageous expenses have cost companies, however. After all, “Who would divulge such a thing; it’s embarrassing,” says Steve Lickus, regional vice president of Robert Half in Chicago.

Others simply squeeze their way through the approval process, like the employee who “submitted an $800 helicopter ride in the South of France. It actually got approved as a safer form of travel,” Brian Bleifeld, CPA, recalls.

And while business travel typically qualifies as a normal business expense, there are limitations to even this.

“An employee needed to be in New York Monday but he wanted to fly out on Friday, because he said it was the same cost. So when he got back from his business trip, he included his hotel bill, receipts for a Broadway show and tourist attractions. He pleaded ignorance,” Lickus tells us.

Jesse Harrison of Zeus Legal Loans has seen some interesting claims as well. “I’ve seen employees claim more hours than exist in the day, which means they not only weren’t sleeping, but they magically added one more hour to the 24-hour clock,” he says. “Another ridiculous attempt I encountered was for a $1 pen. An employee had bought pens from the office supply store with his own money and he wanted to be compensated for the amount of pen used for work versus personal use.

“Still another employee wanted to charge the company for an accident that she caused on her way to work, and another wanted to charge her employers for the depreciation of her car due to commuting to work.”
So how can businesses stem the tide of silliness? Here are four straightforward solutions.

1. Train employees

“We make sure every employee understands his or her rights regarding expenses by having regular meetings,” says Harrison. “But a good rule of thumb is to put yourself in your boss’ shoes. If your boss would find the expense laughable, then don’t try it.”

2. Communicate clearly

Once clear-cut rules are in place, make sure you communicate them regularly. “You have to remind employees of policies at least twice a year and it should be a part of the onboarding process,” Lickus explains.

3. Go paperless

Another best practice is to eliminate paper processes altogether, says Phil Gorman, founder of ExpenseTech. “Use software. Rules or policies, such as requiring sufficient details about individual expenses, monthly submission deadlines and approval chains, are what we recommend most often. Without structure, some employees may take advantage of the lack of oversight and ask for forgiveness later,” he warns.

4. Ask questions

Before any expense is submitted, Robert Half suggests asking these three questions:

  • “Is this within the company policy?” If there’s any question, check with the HR department. Taking a few minutes at the outset can spare embarrassment later.
  •  “Could there be any confusion?” If your boss doesn’t know the baseball tickets you bought were to entertain a client, you could be putting yourself in hot water unnecessarily.
  • Does this pass the grandma test?” “Would you be comfortable telling your grandma what you’re trying to put through,” asks Lickus. “If not, don’t do it.”

The world of expense reporting, much like the world of tax exemptions and excuses for being late to work, will remain filled with grey areas and the likelihood of a laugh or two. Whatever you can do to keep things on the up and up will save company time and money, as well as employee morale.

Who’s Fault Is It Anyway?

It wouldn’t be fair to point the finger only at employees when it comes to issues surrounding expense reporting. According to research commissioned by global software company Unit4, 32 percent of US employees are frustrated with their employer’s expense process, and 42 percent feel financially taken advantage of through the expense reporting claim process.

“The reasons for not submitting are varied: It’s time-consuming or frustrating, lost receipts, claim amounts are too low to bother, or some employees simply forget,” says Kara Walsh, chief human capital officer at Unit4.

The trouble here is that this could lead to a negative work environment where employees are short of money and feel disengaged in their jobs. “Since people are the core of any company, particularly those in service industries, a disengaged workforce will inhibit long-term strength and stability,” says Walsh.

Here, again, technology could be the solution. “Make the expense management process easy, on-the-go and intuitive,” suggests Walsh, pointing to the benefits of mobile expense reporting apps. “Functionality like automatic tracking and filing mileage, and creating e-receipts from photos of receipts, frees people from inadequate processes and in turn makes for a happy employee,” she says.