Every company’s been stepping up its benefits game to attract great hires. Tuition reimbursement pays you back two ways — it’s a high-value perk for job seekers, and investing in employee educationand training is crucial to your organization’s long-term success. However, these programs can also pose a fraud risk in ways that might surprise you. For example, in one recent case, four employees submitted more than $400,000 in fraudulent expense requests for college classes they never even enrolled in.
To avoid having tuition reimbursement benefits become more a liability than a benefit, consider the following steps:
1. Request original documentation. Most educational institutions provide a transcript and receipt for fees paid as well as a diploma if the employee earns a degree or certification. To help prevent the submission of fraudulent documentation, as well as multiple claims for the same expense, consider requiring original transcripts and receipts for fees paid. In addition, some employers request copies of canceled checks or credit card statements to verify that the payment for which the employee is seeking reimbursement was actually made.
2. Help managers with a structured approval process. To keep employees happy, managers may be tempted to “rubber stamp” approvals. Although the majority of tuition reimbursement requests are legitimate, failure to scrutinize claims can result in fraud. Managers should be given a checklist of documents to be submitted with each request, and have a contact person to go to with questions or concerns.
3. Allocate tuition reimbursement to department budgets. To increase accountability and encourage managers to closely review reimbursement requests, consider allocating education expenses to individual department budgets. The level of due diligence that managers perform tends to increase significantly if their departments are charged with the expense. However, you don’t want managers to discourage employees from taking advantage of training opportunities, so make sure the final decision to approve or deny a request rests with someone other than the department manager.
4. Pay the school directly if possible. Depending on the size of your organization and the number of employees who pursue further education each year, it may be a good idea to pay the learning institution directly. That way, your company won’t have to rely exclusively on the documents submitted by employees. In addition, you might be able to negotiate a discount for bulk payments. Paying an institution directly not only reduces the chances of employee fraud; it may also reduce your administrative costs as it involves less paperwork.
5. Reimburse expenses only for accredited schools. Unfortunately, the number of “diploma mills” has exploded in recent years. Establishing a policy to only reimburse for accredited schools can help eradicate tuition fraud as well as potentially increase the quality of education your employees receive.
6. Implement an employee hotline. When employees commit tuition reimbursement fraud, they may be tempted to share their success with co-workers. A hotline can provide employees with an anonymous method to share the information that can stop tuition reimbursement before losses mount.
Tuition reimbursement fraud is relatively easy to detect and prevent. And given the importance of educating and retaining motivated employees, preventing reimbursement fraud should be a priority for every organization.