Sunday, April 03, 2011

An employee with a flight of hand

An upper-level employee travels regularly for his company for his job in sales. His company's policy is to let employees book and pay for their own fights and then fill out an expense report to get reimbursed.

The company tries to reimburse its employees in a timely manner, usually within a week of when they submit their expense report.

The employee has regularly been submitting forms from an online travel website that he's printed out, presumably reflecting the cost of the flights he's been taking. These forms have the actual flight information including date, time, and airfare on them.

He's been operating in such a manner without incident and getting repaid for these tickets for months.

The trouble is that what he says he's been paying for tickets is not what he's actually been paying for tickets. 

A reader who helps process the expense reports for employees writes that the employee has, in fact, been flying at "buddy rates" which are much lower. (Apparently, he has a family member who works for one of the airlines.) So, for example, instead of it costing $400 for a round-trip ticket to Las Vegas, he pays $50 at the buddy rate, and submits a printout from the website that suggests the flight cost the full $400.

"The only reason we caught this is sloppy paperwork," my reader writes. The accounting department found a standby buddy ticket rules sheet inadvertently attached to his expense reports. Upon further investigation, they found other documentation to suggest what the employee had been doing.

"I need help in explaining this to this upper level employee," my reader writes. "He is a long-term employee who does a very good job. I think he feels entitled . . . but I also believe it is dishonest and it is stealing from our company."

There should be no doubt in my reader's mind that what his employee is doing is wrong. He may feel entitled, but for him to overcharge his employer for a service he doesn't pay for is indeed dishonest and fraudulent. If the employee felt entitled to be reimbursed the full fare rather than his discounted fare, the right thing would have been for him to talk to his employer about this rather than make that decision for himself.

The employer can't require the employee to use the buddy rate he gets, but it can and should insist that he not fabricate expenses on his report.

The right thing is for my reader to be direct with this employee and tell him to stop misreporting his expenses and to reimburse the company for any amounts he's been overpaid. It doesn't appear that the company wants to fire this employee for his actions, but any employer would be within its rights to do so.

The company would be wise to start insisting that actual receipts (either printed out from an airport kiosk or submitted from a credit card bill) be submitted with expense reports rather than printouts from a travel website.

But that's a management decision. The ethical choice here is clear: Insist that your employees not falsify the reimbursable expenses. 

Jeffrey L. Seglin, author of The Right Thing: Conscience, Profit and Personal Responsibility in Today's Business, is an associate professor at Emerson College in Boston, where he teaches writing and ethics. 

Do you have ethical questions that you need answered? Send them to rightthing@comcast.net. 

(c) 2011 JEFFREY L. SEGLIN. Distributed by Tribune Media Services, Inc.

6 comments:

Anonymous said...

Come on, whoever heard of a company allowing submitting an expense report based only on a piece of paper listing prices charged by an airline? When you submit an expense report, you pay for the flight and submit a copy of the actual charge in your expense report. What reputable company would allow an employee to submit instead a list of airline prices? It is amazing to me the manner in which this company allows an employee to fudge the expenses. Wouldn't you love to see how this company's other accounting procedures stack up against normal accounting guidelines? Bottom line is this dishonest employee should be terminated immediately. To do otherwise makes a mockery of honesty in expense reports.

Charlie Seng

William Jacobson said...

Jeffrey, this is clear cut fraud on behalf of the employee submitting the falsified expense report but the blame here falls squarely on the company. Why would an accounting department accept a printed list of fares from the internet as verification for an expense report?!? The company left itself open to this abuse and should tighten its accounting practices. I agree with Charlie. This is and should be a terminable offense... it certainly would be in the company I work for.

William Jacobson
Cypress, CA

ECS said...

Yes this is flat out fraud-- and could conceivably lead to criminal prosecution. Why this yahoo should not be fired escapes me.

Anonymous said...

Clearly there is no ethical question here: this employee has comitted fraud, and he knows it.

That there is no ethical question is clear. But there is an accounting question: does this company have an accountant or accounting clerk? Does whoever reviews expense reports and purchase orders and invoices look to see if the data match, if there is an actual invoice or receipt?

Would this company pay for a car or truck by the sticker price..... or would the accounting department require an invoice that shows the actual price paid?

Put another way: is this a company with profit as a goal?

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