Nonprofit Quick Tip: Travel and Expense Reimbursement Policy

For nonprofit organizations, expense reimbursement fraud schemes are the third most common type of fraud according to the Association of Certified Fraud Examiners’ 2018 Report to the Nations on Occupational Fraud and Abuse. These schemes were present in 29 percent of the reported fraud cases.

With employees more mobile than ever, how can your organization protect itself? The first step is to develop a travel and expense reimbursement policy. This policy dictates which expenses will be reimbursed, how employees should request reimbursement, and who will approve the expenses. The policy should also address situations of noncompliance and disciplinary measures that will be taken in the occurrence of fraud.

While trust is a crucial element in the workplace, it cannot replace essential internal controls like the approval process. It is imperative that the policy be in writing and that it is fully communicated to employees. It’s also important that those who are approving the reimbursements know which details they must check and why, if the approval is to be meaningful and effective. Furthermore, to discourage and detect potential fraud or error, analyze cost trends by employee and type on a monthly basis.