Are executives responsible for the most expense report misconduct?

by AppZen August 27, 2018

In the small and connected world of expense report auditing, it’s a common refrain that executives are the biggest and most frequent perpetrators of employee fraud. This widespread, faux-contrarian thesis asserts that it’s not the young folks fibbing on their expense reports, but rather leaders near the top who most often feel entitled and audacious when it comes to T&E.

I myself repeated the platitude blindly so many times that it finally occurred to me to check whether it’s actually true. Luckily, I work at a company at the forefront of expense report audit data. So, here is how the misconduct breaks down across job levels.

At first glance, it seems the executive-as-bad-actor thesis is incorrect. Adding up the Associate and Manager columns, we see that the two bands on the left are responsible for almost a combined 66% of all flagged expenses.

But of course this is somewhat misleading since there are simply more associates and managers in the world than there are vice presidents and chief officers. So I went to LinkedIn and pulled the raw number of people self-identifying by job level.

The best way to look at the data, then, is to create an index to see which band has the most expense reports flagged, irrespective of the group size on LinkedIn.

So the data shows that the common refrain is only half true: C-Level executives are, by far, the biggest culprits of expense report misconduct – more than 7 times more likely than the average person, according to our platform.

Interestingly, associates come in second – almost 3 times more likely than the average office worker.

There are broad social factors that may help explain the data. Directors and Managers are often mid-career, perhaps starting families, and focused on getting ahead. They are risk-averse, and the small chance they get caught for expense fraud is far outweighed by other life priorities.

Associates, on the other hand, tend to be younger with fewer responsibilities. They might drink the corporate Kool-Aid less, and engage in risky behaviors more.

Finally, C-level executives can be miffed about traveling, feel entitled to spend more than policy dictates for everyone else, feel emboldened to spend more because no one will ever have the temerity to question them – or all of the above.

In the final analysis, the people at the polar ends of the chain command commit the most employee expense fraud, while the folks in the middle show considerably more rectitude.

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