Blame it on sticky fingers, late nights, or month-end deadlines—employee misconduct can sometimes just be an honest mistake. While some expense fraud is clearly intentional and headline-worthy, most cases fall into a gray area that's harder to categorize.
The typical case of accidental expense fraud isn't clear cut
Consider this scenario: A new employee submits their personal phone bill for $110/month for reimbursement. The company expense policy only allows reimbursements up to $40/month. However, the employee is successfully reimbursed $110 and continues submitting subsequent monthly phone bills—never realizing they're violating company policy.
Is this fraud? Or just an honest mistake that slipped through the cracks?
Why "they should know better" isn't a good enough answer
It's tempting to blame the employee—they should "know better" and "read the T&E policy," right? But distinguishing between misconduct and genuine human error is critical. Getting it wrong can lead to unnecessary internal investigations, damaged reputations, and demoralized employees.
From the company perspective, determining whether misconduct was intentional requires extensive due diligence: reviewing work history, performance reports, previous violations, manager feedback, and prior expense reports. This kind of investigation takes significant time and resources.
Both parties share responsibility
When expense fraud turns out to be an honest mistake, accountability falls on both sides:
The company's responsibility:
- Maintain a comprehensive, enforceable T&E policy
- Provide mandatory annual compliance training
- Make policies easily accessible to all employees
- Implement automated expense auditing to catch violations before reimbursement
- Use educational remediation before punitive action
The employee's responsibility:
- Review and understand expense policies
- Ask questions when uncertain
- Submit accurate, compliant reports
Prevention is easier than investigation
The real solution isn't better investigations—it's preventing accidental fraud from happening in the first place. When AI-powered expense audit software reviews every expense report before payment, it catches policy violations immediately—whether they're honest mistakes or intentional fraud.
This approach protects both parties:
- Employees get immediate feedback when they submit something out of policy, so they can correct it before it becomes a pattern
- Finance teams don't waste time investigating months of accumulated violations that could have been caught on day one
The role of corporate culture
The key to striking the right balance is corporate culture. Companies that treat accidental violations as learning opportunities—rather than immediate grounds for punishment—create environments where employees feel comfortable asking questions and self-correcting.
But culture alone isn't enough. Without automated compliance controls, even well-intentioned employees will make mistakes that slip through manual review processes.
Want to catch expense policy violations before they become problems? Learn how AppZen Expense Audit automatically flags out-of-policy expenses in real time.
