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by Hannah Im | March 10, 2009


The honor policy
As consultants, it's very easy to take advantage of our accounting departments, especially in large firms where almost every consultant travels most of the time. Expenses add up quickly, and most accounting departments only spot check expense reports. We are supposed to submit our reports to our managers for their sign-off, so the accounting staff can focus on processing, rather than on reviewing each report. But when everyone is traveling and working long hours, the review policy can be somewhat lax.

Most of our managements expect us to abide by the unwritten honor policy. However, I know of many instances when this policy is abused. It is especially easy to abuse the policy when consultants receive per diems, instead of having to submit hard copy receipts for exact amount reimbursement. Consultants may exaggerate the cost of dinners, report a higher tip than they paid for their taxi rides, and charge through expenses under false scenarios. For example, some consultants double their receipts by going out for meals in large groups and allowing the one who paid to expense it and then expensing a portion for themselves too.

Then there are the expenses that just make no sense. I know of one firm that allows partners to expense their babies' diapers but frowns on directors who try to do the same. In another instance, consultants have "treated" their clients to topless clubs or pub crawls. The consultants charge through the expense as "client entertainment" or "project development" (or some such equivalent), though the client is ultimately billed for it anyway. Of course the clients see only the lump sum on their bills and usually refrain from asking to see the expense reports. But imagine the consequences if a client ever found out the actual expense.

Stealing from yourself
Implementing expense reporting ethics is very important to the health of the firm. All financial concerns, be they incoming or outgoing, impact the firm's bottom line. This, in turn, affects consultants' bonuses. Also, if unethical behavior is caught, it can debilitate a client relationship, not to mention result in an employee's termination. Additionally, imagine your spouses' reaction when you tell her you got fired for something as petty as lying about your expenses. Or try explaining it to a future employer.~You probably will not lose your job if you are ever caught. The more likely scenario is that management would have a conversation with you to make sure you understand the policy. You will probably only lose your job if you take advantage of the system too frequently or get caught with unacceptably large sums. (Be warned that the firm holds the right to take legal action against you, in addition to firing you.)

By and large, consulting companies are very proud of their code of ethics. Our business is built on the trust between the firm and its clients. Breach of expense reporting ethics is paramount to breaching the clients' trust. Put in more basic terms, cheating on expenses is no different than stealing. To make it worse, it is not stealing from an employer, but from your own pocket. The firm's revenues are put toward business continuity and your salary. To steal from the company is to steal from your future with the company and from the salary you would have received anyway. Moreover, dishonesty about your expenses is unfair to those who choose to be honest. So not only do you steal from your future with the company and your salary, you also steal from your colleagues'.

Think twice
Sure, everyone does it once or twice. I admit to taking a taxi on the firm when I worked fewer hours than the policy states, only because I was too tired to take the train. I also admit to fabricating amounts when I lost the receipt and failed to remember the exact amount. I did so knowing that neither the firm nor the client was going to care about a difference of $20. And I did not allow it to become a habit. In total, I probably owe all my employers less than $300 over the period of my entire career. I would not be surprised if others, including top-level management, owe similar amounts if not more.

If we think about it, a few hundred dollars here and there, multiplied by hundreds of thousands of consultants adds up to impressive sums. That money could have been spent on training or better laptops or other resources that would help to improve your job performance. So next time you submit a report, think twice about how you write the report. Scrutinize your motives and the potential short-term and long-term consequences. If nothing else, by reporting your expenses accurately and honestly, at least you never have to wait for the reimbursement check, wondering if anyone will catch you in a stupid lie.


Filed Under: Workplace Issues