Watch Your Credit Cards! Expense Reimbursement Fraud at a Not-For-Profit Organization

Frequently, internal controls at not-for-profit organizations depend primarily on the integrity of their employees.  Sometimes these employees lose sight of their integrity, and fraud can occur in spite of the organization’s mission. 

One assignment we completed for a not-for-profit organization involved a case where the organization suspected that an executive had been conducting an expense reimbursement scheme, including significant misuse of the organization’s credit cards. 

Perpetrators of expense reimbursement schemes produce false documents that cause the victim organization to unwittingly make a fraudulent disbursement. 

The four main types of expense reimbursement fraud schemes are:

  • Mischaracterized expenses
  • Overstated expenses
  • Fictitious expenses
  • Multiple reimbursements

So, what happened with our not-for-profit organization that suspected its executive of an expense reimbursement fraud scheme?

As a result of the investigation of the executive’s schemes, the executive left the organization and paid back thousands of dollars to the organization in settlement of potential claims.  During our investigation, we discovered numerous issues regarding the organization’s policies, procedures and financial activity - in addition to the fraudulent expense reimbursement issues.  

Basic recommendations to help prevent expense reimbursement fraud at your organization include:

  • Develop formal written policies and procedures regarding credit card use and spending limits
  • Consider use of purchasing cards (P-cards) that allows limits to purchase amounts and restrict where purchases can be made
  • Expense reports should require supporting documentation and explanation of the expense
  • Segregate duties for cash deposits and recording of cash and accounts payable processing and disbursements

If you have any questions regarding potential fraud schemes or internal controls at your not-for-profit organization, please contact the Business Advisory group at Schneider Downs.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2020 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on

COVID-19: The Long Road to Recovery
Could your PPP loan affect the sale of your business?
FASB Proposes Changes to the Definitions of Financial Statement Elements
Schneider Downs’ Construction Practice Ranked Once Again
Paycheck Protection Program – Treatment of Owners and Forgiveness of Certain Nonpayroll Costs
District Court Dismissal in Lee v. Argent Trust Company Upheld in Appeals Court

Register to receive our weekly newsletter with our most recent columns and insights.

Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us

contact us

Map of Pittsburgh Office

One PPG Place, Suite 1700
Pittsburgh, PA 15222
p:412.261.3644     f:412.261.4876

Map of Columbus Office

65 East State Street, Suite 2000
Columbus, OH 43215
p:614.621.4060     f:614.621.4062

Map of Washington Office
Washington, D.C.

1660 International Drive, Suite 600
McLean, VA 22102