Do we really need to audit our expense reports?
Spend a morning with our experts in Dublin and you’ll soon realise the answer is a resounding yes.
The technology people would like us to believe that an expense management system can carry out all the policy checks necessary to ensure compliance to the travel policy − but the reality is most 5 year olds could find a workaround to any of the rules in a system (a meal limit of 30? Well simply change the quantity to 2 and suddenly the limit will be 60..).
In any case the rules will only work if the employee enters all the information correctly in the first place. The conclusive way to ensure policy compliance is to carry out a 3 way audit check i.e., check the actual receipt against the amount claimed to ensure they match and then check the expense type against your travel policy to make sure the actual spend is in line with the policy.
It’s all too easy for an employee to claim 100 instead of 10 − its only when you look at the receipt and see the amount that you can be sure it’s been entered correctly.
No system in the world can do this check. You need a real person, who knows what they are looking for, reviewing the receipts and what the employee has claimed.
Some companies like to think that manager approval will solve this problem. But in the real world managers rarely look at the expense claims in detail and it’s unlikely they would spot this kind of ‘error’.
What extra value does Expenseflo provide?
Our audit experts check every one of your business travellers’ expense receipts against their expense claims for accuracy and policy compliance. When we first start working with a client over 50% of claims often need amending.
Some errors are accidental, some deliberate. Either way, they cost your company big money.
By combining our expense audit and VAT services, clients can minimise their travel spend and maximise the VAT recovered. In fact, the value of the VAT recovered is traditionally doubled when combining our expense audit and VAT recovery services.
We’ve already invested in an Expense Management System; do we still need to audit expense reports?
Nearly all the expense system providers talk about how quickly you’ll get a return on your investment if you implement their expense tool.
How many of you have actually looked at this after six months, twelve months or even after two years to see just what you saved?
For those of you that have, well done, we’d be interested to learn what you found. For those that haven’t, you are in the majority and may well have forgotten the business case that was written to help you justify the investment and cost of change management for this process. The reality is that in nearly all cases the expense system will not have eliminated all the issues that you were having before you went on this journey.
What a lot of companies fail to consider when they implement a new expense system is to look at how the ‘back office’ process will handle the technology which helps travellers to submit expenses faster than ever before. This impacts your finance teams - with the volume increase and the speed of submission, how will your finance teams cope? If they can’t manage the additional volume this will cause at best a backlog and a delay in reimbursement to your employees and at worst result in expense claimed not being audited.
Employees who have the opportunity to exploit weaknesses in your organisation’s expense reimbursement processes and procedures will do so. Expense claim fraud can be among the most difficult to detect and prevent. That is in large part due to the extraordinary variety of ways in which such crimes can be committed.
Meridian works with some of the largest and diverse businesses across the globe managing the back office finance processes for T&E. We can plug into any expense management and ensure you get the full benefit of the investment you made in your expense management system.
Our employees are based globally? Can you support multiple languages?
Yes, Meridian is a global company with a Global Service Centre based in Dublin, Ireland. Our T&E audit teams are multilingual and backed up by 21 offices worldwide where we provide local support. In each of our offices we have expert VAT experts who liaise with clients in local language and with the VAT expertise required to maximize refunds.
Will Expenseflo increase my VAT recovery?
Absolutely. One of the many benefits of Expenseflo is that our auditors will educate your employees so that they know was constitutes a VAT compliant receipt and how you go about getting one. On average our Expenseflo clients double the value of their VAT recovery within a year of implementation.
How do you ensure my domestic VAT is compliant?
Many organisations fall into what we call the “domestic VAT trap”. Put simply, if you use an expense management system and you have built domestic VAT determination into the system then you must always audit 100% of the claims.
Many expense management systems will allow you to set the VAT rate at category level and assign the correct net and VAT amount based on the gross entered by the employee. What if the employee enters the information wrongly (which they do over 20% of the time)?
If you rely on this information to report on your VAT without checking then you are almost certainly over-claiming your VAT and will be liable to penalties.
When auditing for our clients we ensure:
a) there is a valid VAT invoice
b) the employee has selected the correct category
c) the spend is actually recoverable
As we have knowledge and experience of the rules in each country of spend we check that all line items are correct so you can include it in your VAT return. Sleep well.
What is Expenseflo going to cost me?
A better question should be “what is it costing me not using Expenseflo”? We charge on a transaction basis but the reality is we are a profit centre not a cost centre. Couple the additional VAT recovery we identify with the reduction in the reimbursement to employees and you have a very strong business case.
We may not be the sexiest tool in the travel policy compliance box but we get results.