Whether you've been given a corporate credit card or you're handing stacks of receipts in to the accounting department, having access to company funds is a pretty heady situation. In fact, if media coverage is any indication, it's a little too much temptation to handle for the many execs and public servants who've been caught with their hands in the company cookie-jar.
Expense account fraud is a volatile issue in global corporate culture, and the fall-out following several high-profile scandals in Canada, combined with the frugal economic climate, means companies are only growing more vigilant about where their money is going. While you may not have the kind of liberal allowances that let you get away with expensing multiple bottles of Dom Perignon, it's still important to know exactly how to use and not abuse your privilege.
Expense account fraud isn't always as simple as passing off personal purchases as business expenses when they're obviously not. Some people try inflating prices in order to pocket the difference; they claim multiple, seemingly-insignificant fake expenditures which add up to a sizable sum; they submit receipts that have been forged or faked or photocopied; they claim for the maximum allowable reimbursement every chance they get; or they find a way to double-bill the company for the same expense on several separate reports. Yet all this still amounts to one thing: fraud. And fraud can have some pretty serious consequences for perpetrators, termination, prosecution, and a destroyed professional and personal reputation being just a few of the possibilities.
Understanding exactly what business expenses are takes the guesswork out of making your report. Paul Cass of Account4it Canada Inc designates a business expense as any cost you incur while earning revenue for your company. That's the definition Revenue Canada uses too, and it's the one you should stick to whenever you consider expensing something. Using your expense account properly means knowing exactly how your company intends for its money to be spent. Cass recommends doing your homework to avoid trouble. "You always have to go back to company policy because every company is different," he explains. "Some companies are much more liberal than others. But read the expense policy. Sometimes it's really dry. It's usually not big though, and generally pretty straight to the point of what you need to know." He stresses that attitudes and practices vary drastically depending on your industry and the size of your company.
Chrisitina Vecchiato, a young rep who's worked in sales at Kate Walker and Company for a little over a year, relies largely on common sense to dictate what she reports. Her company reimburses her hotel bills for conferences and trade shows, her long distance phone bill, and her gas, "because our jobs are to be on the road. If we're not on the road then we're not working." As a sales rep, Vecchiato often meets clients at restaurants or cafes, but, she says, "You're not gonna go to the Ritz and have dinner. That's not a common thing that the people at my office do. We're not out to wine and dine; we're out to have a chat over a cup of coffee." Even when something is technically expensable, it's important to keep your workplace's specific culture in mind before you spend its money.
The best way to avoid cheating your company, and cheating yourself, is to be diligent. Keep a notebook where you log the particulars of each expense, the date, time, and place of purchase, as well as an explanation of why it's a legitimate business expense and as well as any and all receipts. If you're going out to dinner, that's probably fine, but your company needs to see details. "The accounting department actually needs the itemized receipt that shows what you had, the GST number if it's in Canada, and then also the credit card receipt which shows the accounting department what you tipped," says Cass. That kind of attention to detail not only makes things easier on your accounting department, but demonstrates to your employer that you're honest and transparent about how you use company resources. It also means that you won't get stuck covering anything out of pocket that you might have been able to claim had you been more thorough.
Like all accounting, expense accounts are about balancing. "You want to be an honest employee, because the more money you take out of your company, the less money they have to pay you," Vecchiato cautions. "You don't want to expense every red cent, because that could end up putting your company under, and then you're out of a job at the end of the day no matter what your expenses are." jp