The Fraud

 

The stylish fountain pen held by the accountant stopped on the line item that gave the comparison in between budgeted and actual expenditure with respect to employee conveyance reimbursements. The variance was substantial and the accountant didn’t miss it. Almost a variance of more than 55 %. That was material and needed some explanation to be provided to the financial committee of the Company. It was not every day that significant variances were observed in employee conveyance reimbursements.

The Accountant, Mr Patel, looked at the detailed sheet that was attached for the monthly employee conveyance reimbursements. He observed that the first three months were in with the monthly budgets. The significant variance started from the fourth month and as the months passed the gap increased. Mr Patel couldn’t understand the reason for the same.

Every year, the budgeting team made annual and monthly budgets based upon business expectation and related cost. Employee related costs were budgeted based on head counts but the expense head of employee conveyance reimbursements generally never showed any significant gap in comparison to the budgets.

Mr Patel asked for the detailed employee wise monthly report for conveyance reimbursements. Over the next two days, he went through the report in detail. He observed that three employee who were at the post of managers in various departments contributed to the significant varinaces. He highlighted the three names.

His next stop was the supporting bills which were provided by those three employees whom he had marked out. Over the next week, he received the files in relation to the supporting back up document for the reimbursement claims. After in depth review of the supporting nothing seemed out of order to him. All the supporting were properly marked and signed by the concerned employees. Proper authorization was also present on all of them.

Concluding that perhaps, he was overthinking, he closed down the files. He looked at the variance sheet once again. Almost everything seemed fine except the employee conveyance reimbursements. Mr Patel decided that before he would give the final go head for the variance to be included in the finance committee meeting, he would do a on field walkthrough.  

He noted that majority of employee claimed reimbursements for either cab rides or routine bus and rickshaw rides. The next section of employees claimed reimbursements for their car fuel. For these fuel reimbursements, the bill from the fuel station was submitted. Mr Patel had checked all the fuel bills for the employees where in varinaces were observed and found nothing exceptional.

Over the next three days, he made a on field walkthrough on the process of authorization and checking the conveyance reimbursements which didn’t reveal any malpractice. Finally unable to get any lead, he finalized that it was time that the variance report be approved and included in the docket of the finance committee meeting.

That morning when he arrived at office to give a final approval, he got down from his car and met Mr. Sharma at the car park.  They both wishes each other and walked together from the parking lot to the lift. As Mr Patel arrived at his workstation, he sensed something. He recalled to see something which was important but couldn’t link it.

He walked to the floor cafeteria to get a quick coffee. As he sipped his coffee, he sprang up from his chair. He hurriedly walked to the files which contained the supporting bills of the reimbursement. He turned them abruptly until he arrived at the employee which he seeking to. He looked at the bill and then recalled what he had seen in the morning. A smile appeared on his face.

He quickly ran through the bills of the other two employee who had shown significant variance in reimbursement. He took a copy of the bill on his mobile and quickly walked out of his office to the parking lot. After searching for some fifteen minutes, he found what he was looking for.

That evening, Mr Patel sat at his workstation with all the bills of the three employees. He called them to a nearby conference room.

The three employees, one of which included Mr Sharma included, arrived at the conference room and saw Mr Patel and the company’s internal auditor sitting.

Mr Patel kept the bills in front of them to which all three agreed that it was submitted by them.

“But what’s the problem? These are original bills.”

Mr Patel showed the fuel bills to the internal auditor. It was original ones. Each of the bill had the car number and fuel type and amount handwritten by the fuel station person who had fueled up the car.

Mr Patel looked at the bills and looked up at Mr sharma.

“Mr Sharma. You have been submitted a bill of Petrol reimbursement for the last nine months.”

“Yes,” Mr Sharma replied confidently.

“But the car number that is mentioned here. I checked it in the parking lot. It’s not a petrol car. It’s a diesel car.”

Mr Sharma went silent.

“The same is for the other two of you.

“You three have been submitting petrol bills for the last nine months when actually all three of you have vehicles that run on diesel. You three surely have taken advantage of the rising petrol prices to your advantage it seems.”