It is common for an entrepreneur to hire an accountant, or a group of accountants, to help guard the bottom line of his or her company's financial success. Being exact with how the company's capital is spent and invested, allows business owners to keep a healthy relationship with all laws governing the company's financial practices.
An accountant must keep order and hold a structure that keeps records for the company's financial well-being. They do so by accounting for all earnings and expenses flowing through the company. A successful accountant makes sure to educate employees about how to report their expenses, for accountability of all information in due timing, and transparency with honest statements. Remember, expense report audits are only a negative experience when you are hiding something.
An accountant's guide can be a beneficial resource to facilitate cooperation and a collaborative attitude that supports sustainability in a business group. In this article, we review some key elements of auditing expense reports. Read on for more information on guiding your clients through an expense report audit.
An audit is a revision of proof. Businesses conduct audits to establish the existence, truth, or validity of the evidence or the logic used in the report that was presented by the accountant.
Any non-business related expenses claimed as business expenses will raise a flag. Further, it can lead to an audit investigator to ask for proof related to the expense. This means you will have to show the invoices, all contracted purchases, and more to confirm the integrity of your claim.
While auditing expense reports, there are some key flaggers you need to look out for. While the accurate expense claims can get a clean chit, you must identify the red flags. Here are some of the indicators of fraud you need to look out for:
Additionally, it might be helpful to keep in mind that for the auditor, it is all about timely expenses, reasonable expenses, and accuracy of expenses.
Your employees incur a variety of business expenses. This can include buying supplies for the company, paying for business meals, travel expenses such as airplane tickets and ground transportation, workshops, training, or any services and products requested in the name of the company.
When your employees use their money to make business-related purchases, the onus of reimbursement falls upon the business. While some employees may stay honest and report actual expenses, there are many more who may either inaccurately report or altogether misreport business expenses.
An expense report is about claiming reimbursements. A common sight that most accountants notice is fraud. Expense fraud comes in various sorts. Be it a minor number change in the form of a manual error or an out-right submission of duplicate bills or receipts.
When a business ignores and reimburses its employee for fraudulent claims, it not only results in a reduction in revenue but also poses a threat to getting into trouble with the IRS. Hence the objective of auditing expense reports is to balance the bottom line while also staying per the law.
Auditing expense reports allow businesses the opportunity to revisit documents and receipts presented by the employee in the form of expense reports. These expense reports work as evidence to ensure all expense reports comply with your travel policies. They also ensure you always stay audit-ready!
As the accountant, it is your right to establish a comprehensive expense report audit to guarantee that your company is always away from trouble. Ensure your auditing of expense reports is based on your company's financial dynamics and business goals. Also, try to be flexible within possibility and make sure you are not micro-managing people or being excessively controlling.
Education is your best advisor, but trust is your ally. People who Trust are trusted in return and honored with loyalty.
Fyle is a neat and easy way to track business expenses while reducing the chances of error while auditing expense reports. We promise to put an end to all your expense management difficulties. To learn more about what Fyle has to offer, contact us today.