A recommended practice to detect expense reimbursement schemes is to compare current period expenses to both historical expenditure amounts and budgeted expense amounts.

• A. True
• B. False
• C. Not always
• D. Sometimes

Answer: (A)

Using variance analysis to detect expense reimbursement schemes involves comparing actual expenses to both historical patterns and budgeted amounts. By checking current period expenses against historical spend, you can spot anomalies such as sudden spikes, new vendors, or unusual frequencies that don’t align with past behavior. Comparing to the budgeted amounts adds a planning dimension, highlighting any expenditures that exceed approved limits or fall outside what was authorized. Together, these comparisons provide a clearer view of inconsistencies: the historical comparison flags unusual trends, while the budget comparison flags deviations from policy or approved plans. This dual approach strengthens the ability to identify potential fraud or noncompliance in expense reimbursements.