Expense audits are done by evaluating the actual paid expenses by how closely they align to the internal policy guidelines. Expense audits can also include a reasonableness check, which determines if expenses are out of the ordinary.
Expense audits typically require requests for and reviews of:
Between the manual nature of audits and the delayed reporting styles, most financial teams would agree that expense audits can be daunting, monotonous and potentially one of their most dreaded tasks. Here are several factors why.
For businesses that are still using manual expense management practices, this likely comes with paper receipts that have to be reviewed one-by-one to ensure that the amounts match up to the reports. For many businesses, verifying the receipt amounts can take the bulk of their audit time – and that’s assuming the receipts are easy to read and complete.
The longer or more complex the expense policy, the more difficult it is to understand for employees. This runs the risk of accidental violations or noncompliance due to misinterpretation or frustration. Ultimately, a lack of compliance adds to the workload during the audit.
Too often, employees let their expense reports pile up and submit them in bulk on a monthly basis – or even less often. This means that during end of year reconciliation periods, Finance teams can be slammed with thousands of reports at once.
When reports and receipts don’t match up in an audit, typically finance teams have to reach out to the employee who reported it and engage in a long back-and-forth process in order to reconcile it.
Whether the staff grows at a steady rate year-after-year or doubles in size in six months, manual expense audits can’t be easily scaled. This means that if a team simply increases in travel, there is no fluid way for accounting teams to process and audit their data in bulk. They simply have to expend more resources for every additional report. Given the length of time that audits can take, it’s no surprise that many financial teams find themselves fatigued. Additionally, the longer they take, the longer the company has to wait to view and act on that data.
However, by using expenses management software with automation capabilities, all of the data required for tax and compliance purposes will already exist in the system – fully populated and ready to use. This not only allows you to better meet the requirements of the new financial standards, but it also minimises the risk of manual error. Expense management automation software can make the process easier for everyone: from employees who are able to submit expenses on-the-go instead of monthly or quarterly, to financial teams who can view the data in real time and avoid manual processes.Back to the top