How Are Your Internal Controls Over Employee Travel Costs?

There are many ways to overstate travel costs. Employees can pad their travel claims. They can take unnecessary trips because they like to travel or need to build their airline miles to get preferred boarding and "free" class upgrades, or have other personal reasons. Employees can claim and charge off to the government higher than prescribed lodging and per diem maximums because of poor internal controls or because no one wants to challenge the claim of a person in authority. They can easily game the system requiring lowest available air fares. And so on. Most of these intrusions can be minimized with effective internal control systems. But what if the owners of a company are doing the padding? That's what a company called Para-Plus Translations was doing. And they got caught. Got turned in by a whistleblower.

Para-Plus had a number of contracts with federal and state agencies to provide interpretation, transcription and translation services. A whistleblower in Para-Plus's billing department (who had a conscious) came forth and reported that the two owners of the company were purposefully overstating the travel time and mileage incurred by its interpreters. Among the claims was the assertion that invoices for sign language services were routinely "upped" by 20 miles. Very few customers called to question the billing and when they did, the bill was lowered, with various excuses provided. Excuses included "typos, interpreter's invoice was wrong, new person in the billing department, etc.

This fraud went on for some time. The allegation asserted that it began in 2008 and continued through 2015. Although Para-Plus admitted no wrongdoing, it agreed to pay $1.5 million to settle the allegations. The whistleblower will receive $330,000 (22 percent) of that amount. Lest you think that's a big payday, consider that the whistleblower was fired from her job (for not going along with the scheme) two years ago so there are lost wages. Also consider that her attorney will receive part of that settlement amount.

You can read more about this case here.