Corporate travel is one of the most difficult expense categories (after payroll) for organizations to manage. In addition to this, travel expense report fraud can be the gateway for many other problems. A well-executed travel expense audit helps you control expense report fraud and save money for your business.
How to Implement the Travel Expense Audit
A travel expense audit focuses on employee incurred expenses such as airfare, hotels, meals, coffee, and more during their business trip. It analyzes the receipts submitted by the employees before approving and reimbursing them.
Occasionally, businesses realize they are losing too much in petty cash. Often, there are too many errors in the submitted expenses. This can be due to the misunderstanding of the organization’s T&E policies, or as a result of reimbursement fraud.
A proper travel expense audit helps you identify what’s hurting your bottom line. Below are the recommended activities to include in your travel expense audit:
Evaluate Your Internal Travel Management Process
Take a look at the ways you manage business travel expenses. This includes pre-trip authorizations, approvals, and the final review. Also, ensure different employees handle different tasks. Employees should never be allowed to approve their own travel expense claims.
Review the Effectiveness of Your Current Processes
Ensure you customize your processes to suit your organization and its needs. Your current process should be prepared to handle both present and future scenarios.
Examine Chosen Reports in Detail
Going through all the expense reports may be time-consuming and difficult. You can choose a set of reports and go through them in detail. This might be an excellent way to identify the most compelling parts of your processes. Detailed testing can also help you recognize if travel expenses made by employees always serve business purposes.
Evaluate Your T&E Policies
Your T&E policy should be clearly documented with a set of guidelines. This ensures that all stakeholders in the expense management process have clearly defined roles with no crossover. A clear travel and expense policy can reduce reimbursements of fraudulent expenses.
The Importance of Travel Expense Audits
Most organizations avoid travel expense audits because they are time-consuming and extensive. However, by adopting advanced tools, you can make the process simple and more efficient. Audits are crucial for controlling costs. Also, they ensure that all employees are compliant with your business travel policy. Most importantly, internal audits serve as the primary way to identify and prevent fraud.
Travel Expense Audit Procedures
Audit procedures are the techniques executed by auditors to get all the information they need. The auditors use this information to form a report. The report discloses a clear view of the financial position of an organization. The audit procedures must be efficient to recognize and prevent future fraud.
Businesses need to follow a set of procedures for a travel expense audit. With a definite and well-communicated procedure, you can prevent confusion within teams or processes. It also supports all stakeholders to know their role in the process. This helps everyone stay informed and proactive. Your audit procedure should include:
Systematic Review of Spend Reports
In this review, an auditor examines whether financial information is substantially clear or not. They will do this by matching records with receipts. This is where having well-documented receipts and expense reports come into play.
Analysis of Doubtful Expense Claims
Here, an auditor can question employees if they find anything strange. For example, if an employee is regular to the same restaurant or hotel, the auditor can ask how all of those are business-related.
Examination of Business Travel Policies
In this step, the auditor can inspect and analyze your corporate travel policies. Using these findings, they can decide how strict managers are in making sure employees follow them.
Verification of Fiscal Records
This is where the auditors will recalculate and question until all financial abnormalities are accounted for. Keep in mind, as processes become more advanced and constant, audits can occur less frequently too.
How Technology Helps You Save Money
You can mitigate fraud and ensure compliance by conducting regular travel spend audits and following best practices. But if done manually, this process could cost you time, money, and resources. The best way to ensure that your bottom line is covered with minimal human involvement is by implementing an advanced expense management system.
With an automated system, your financial team would no longer need to chase employees for expense submission, and there would be no delays in receipt verification and approval. Employees need not to fill lengthy forms for expense reimbursements. Happy employees at the workplace mean an increase in employee productivity and morale.