What is the recommended practice to detect expense reimbursement schemes?

The recommended practice of comparing current period expenses to historical and budgeted amounts is effective in detecting expense reimbursement schemes because it allows for the identification of unusual patterns and discrepancies in expense claims. By analyzing how current expenditures align with what has been historically spent or against budgeted figures, any significant deviations can raise red flags. This practice enables the identification of trends or anomalies that may indicate fraudulent activities, such as inflated expenses or claims for items that were never incurred.

This approach leverages comprehensive data analysis, making it easier to spot inconsistencies and ensuring that the expense reporting aligns with established expectations. In contrast, focusing solely on annual reviews may overlook fraudulent activities occurring over shorter periods, while relying on employee self-reports may lead to misrepresentation without sufficient verification. Limiting reviews to only high-value transactions may lead to missing smaller, more frequent fraudulent claims that collectively could represent a significant loss. Thus, the comparative analysis of current, historical, and budgeted amounts stands out as a robust method for fraud detection in expense reimbursements.