2 recent cases show importance of clear policies & procedures for company credit card use

Your company credit cards can be a breeding ground for fraud via unauthorized usage, especially if there’s only one person in charge of managing charges and transactions.

Lessons learned from two recent cases where companies were scammed out of hundreds of thousands of dollars through improper company credit card usage can help you bolster your own policies.

Lack of oversight led to company credit card fraud

In the first situation, a Kentucky woman named Kimberly Jones embezzled over $260,000 from her former employer, according to a news release from the Dept. of Justice.

As office manager, Jones had sole control over the company’s A/P, A/R, payroll and taxes. Several company credit cards were in her name, and she used them to make various personal purchases. She also fraudulently used credit cards in other employees’ names.

Jones falsely transferred money out of company bank accounts as well. She was sentenced to serve two-and-a-half years in prison for these crimes, and she’ll also pay her ex-employer $260,034 in restitution.

Cards allegedly used for personal trips & more

The second situation involved a more expensive, comprehensive fraud scheme. As described in the York Dispatch, Phuong Nguyen-Davis, who handled A/P and HR at a company in York, Pa., was charged with theft and felony fraud for allegedly using her employers’ accounts to open company credit cards.

In all, she allegedly racked up a whopping $915,045 in unauthorized charges using 19 different credit cards over a five-year period.

The company didn’t discover the theft until it received an invoice from its bank to verify several unknown credit card purchases.

Once the employer investigated, it learned Nguyen-Davis had opened multiple cards, allegedly using them for purchases such as flights to California and Florida, groceries, appliances, car leases, electric bills and medical appointments. She also allegedly made several transactions where credit card payments went directly to a fake company she created.

Strengthen credit card protocols

While the vast majority of Finance pros won’t commit crimes of this magnitude, it’s still important that there’s adequate oversight with your reconciliation process to discourage this behavior.

Even if you have a small team, you should have at least two people involved with reconciling company credit card transactions – one person who authorizes the charges, and another person who reviews credit card statements to make sure charges match up with what’s listed in the general ledger.

You’ll also want to make sure A/P is keeping close tabs on anyone who’s assigned a company card. These employees should be submitting proper documentation of any expenses they incurred to confirm they’re legitimate. A/P should double-check this documentation and keep it on file to help with reconciling the charges. (Automated spend management systems can facilitate this process.)