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(Fourth in a five-part series)Neil Crowell, CPA, CIA, CFSAStambaugh Ness Risk Advisor
In the previous three articles* in this series, we discussed the increased risk of fraud, the importance of fraud prevention during an economic downturn and the role that corporate culture plays in preventing fraud. This topic highlights the risks that are present in fuel card programs.
Fuel card programs can pose a significant fraud risk because they consist of a high volume of relatively small dollar purchases that are difficult to monitor and scrutinize.
Common Schemes
The most common fuel card fraud consists of an employee purchasing gas on a company-issued fuel card for personal use. However, there are other fraud schemes, such as employees paying for a third-party's gas on a fuel card in exchange for cash, or fuel cards being used by terminated employees.
Fighting Fuel Card Fraud
Effectively fighting fuel card fraud requires prevention and detection techniques. For prevention, every fuel card program should have a clearly defined and communicated policy that strictly prohibits personal or any other unauthorized use of fuel cards.
Detection requires an effective system of continuous transaction monitoring. Computer assisted data analysis routines can be developed and run periodically on the fuel transaction database to identify activity that may indicate fraud, such as:
- Diesel purchases in non-diesel vehicles
- Non-employees with active cards
- 10 highest volume cards
- Employees with multiple cards
- 10 highest 3-day / 7-day purchases
- Weekend / holiday purchases
- Same-day purchases in different states
- Abnormally high / low fuel efficiency
- Multiple purchases - same hour / day
- Invalid odometer readings
- Purchases on dates EE did not work
- Duplicate transactions
Services Offered
Stambaugh Ness's Risk Advisory team has specialized expertise in computer assisted data analysis routines, including the development of a fuel card monitoring system for an S&P 500 company.
Our final article will summarize what you should know about fraud prevention.
*Previous articles:
Part 1 - Recession Increases Fraud Risk
Part 2 - How to Develop an Effective Fraud Prevention Program
Part 3 - How an Effective Whistleblower Program Can Benefit Your Company
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