CHICAGO -- The quick action taken this month by the Hewlett-Packard Co. board to oust Chief Executive Mark Hurd at least partly because of expense-report recklessness should be a clarion call to employees at every level: expense accounts are not to be taken lightly.

They are a privilege that companies provide employees so they can conduct business that will help the company grow. Padding your expense account, or lying about your expenses, is outright theft.

"Expense reports are something we all as employers and employees should take very, very seriously," said Arleen Thomas, a senior vice president at the American Institute of Certified Public Accountants.

"They are generally tied to a company's code of conduct that addresses ethical behavior and the fact that it's a collective responsibility of the employer and the employees to conduct their business in a manner that achieves the business goals and helps the company stay in compliance with local rules and laws," Thomas said.

"Employees should really make sure they understand the expense-reimbursement policy and procedures," she added.

Also, there are Internal Revenue Service rules companies must abide by.

The IRS, through what's called an "accountable plan," permits companies to steer clear of payroll taxes on reimbursements or allowances in situations in which the employee expense has a clear business connection, the employee has accounted for it in a reasonable time period, and the employee has given back any leftover allowance within a reasonable time period.

If the IRS stumbles across an expense that it doesn't consider an ordinary and necessary expense, the employer won't be able to deduct the cost.

In the case of a high-level employee, however, the IRS can re-characterize the expense as compensation, in which case the employee then gets hit with the tax.

Most companies lay out guidelines, sometimes very stringent ones, about what's considered allowable expenses and what the reimbursement policies are. Those can change over time or under certain circumstances. Many companies, for example, limited travel and meals with customers in the depth of the recession.

"Expense accounts are a matter between the employee and the company over what the employer is willing to consider a legitimate business expense," said Katie Jaques, a tax instructor at San Diego State University. "That can vary company to company and within a company based on the level of the employee position."

Hurd, for example, likely could use his expense account to cover some personal costs, like for newspapers and dry cleaning, while expenses like those probably would be out of the question for HP sales or marketing people.

In most companies, padding expense accounts, or finding expense irregularities, as Hurd was accused of doing, falls under an area "that may be considered serious enough to warrant discipline up to and including dismissal," as the code of conduct for MarketWatch parent company Dow Jones states.

It all comes down to the trust factor, a big one for employers, particularly when it comes to the top brass. Hurd's forced resignation was not about the money, estimates are that the expenses were $1,000 to $20,000, which is chump change for a company that expects to ring up revenues of $118 billion this year, but about his personal character and his decisionmaking.

"The higher the level a person has in an organization, the more the company is trusting and paying for his or her decisionmaking," said Susan Heathfield, a management consultant who writes the human resources section for About.com, said. "You're not going to want someone running your company who you don't trust."

Most companies have a similar attitude about the rank and file. If you say your $32 dinner was $42 or that your cab ride cost $12 when it was really $9, what else might you fudge on?

"The reason companies have to put policies and guidelines in place is because some employees are unethical," Heathfield said.

And if it's an offense for which you might be fired, was it worth the consequences?

Heathfield offers four rules employees should live by when using their expense accounts:

--Tell the truth.

--Spend the company's money as if it were your own.

--Apply the same cost-saving and cost-cutting principles to your business expenses as you would in running your own home.

--It's not OK to charge the company for anything that was not spent truly on company business.

"Expense accounts," she said, "are just one example of an employee's opportunity to put their business ethics into play."