Travel and Expense Audit Process: How to Manage it Seamlessly
Business travel expense management is one of the most challenging expense categories for an organization. To add to the problem, a whopping $7 billion is lost annually to workplace fraud, and 30% of the fraud is expense reimbursement related.
Furthermore, filing expenses manually increases the chances of errors. One in five (19%) expense reports contains errors or missing information.
So, what can you do to optimize your travel and expense management? The answer is regular travel and expense audits.
Let’s understand what a travel and expense audit means, how it can help you combat expense fraud and how your organization can conduct it seamlessly.
What is Travel and Expense Audit?
When employees take a business trip, they incur travel expenses like commute, food, vehicle parking, etc. After that, they submit all the receipts for approval and reimbursement. The process of checking the validity of those business travel expense claims submitted by employees is known as Travel and Expense Audit.
The finance department is responsible for undertaking regular travel and expense audits. It helps them get insights into travel expense data, control travel costs, and ensure travel policy compliance.
Why conduct a travel and expense audit?
To analyze travel expense reports.
You need to examine whether all the expense claims are materially sound by matching records with receipts and determine what kind of expense claims have been filed and approved.
To detect suspicious claims.
After analyzing the travel expense reports, you may find some dubious claims. For example, an employee visits multiple unknown local sites during international travel. You can then inquire how these visits are business-related and identify whether the employee is committing expense fraud.
To inspect the company’s travel policy compliance.
You can analyze how strictly your company’s travel policy is being implemented by looking at the number of violations. If there are multiple violations, you should check whether it is practical and the employees can understand it clearly.
What are the challenges in the travel and expense audit process?
1. Manual processing
If your company has multiple employees and you require physical copies of expense receipts as proof, you will end up with an overwhelming amount of receipts.
Moreover, using spreadsheets to manage travel expense data manually can cause data irregularities. Irregular data can lead to disorganized travel and expense audits because the auditors will have to spend significant time double-checking the claims.
Automate your expense management process to make the travel and expense audit process fast and smooth-sailing.
2. Complicated travel policies
If your travel policies are complex, employees will be reluctant to go through them thoroughly. They may skim through the policy document and miss crucial points. Therefore, accidental instances of non-compliance can increase. Conducting travel and expense audits with many cases of non-compliance will increase claim rejection-rate and make the process difficult.
Draft more comprehensive and straightforward travel policies to reduce non-compliance cases and simplify travel and expense audits.
3. Employee disputes
When the expense receipts submitted by employees don’t reconcile with the travel policy, the finance team has to reach out to employees personally and engage in a lengthy back-and-forth to justify the claims. The process can get complicated and frustrating and hinder the travel and expense audit.
Ease the reconciliation process with the help of business travel and expense management software to speed up the travel and expense audits.
How to manage the Travel and Expense Audit Process seamlessly?
Evaluate your travel and expense management process.
A thorough evaluation of your travel and expense management process will help you determine the policy-related flaws and fix them. The assessment should include checking bookings, pre-trip approvals, and final authorization.
Look for policy loopholes and workflow overlaps- no employee should be allowed to approve their expense claim. A clear workflow will ensure that no suspicious expenses are approved, making audits easier.
Check your travel and expense policy.
If you draft a clear travel and expense management policy, it will help you reduce cases of non-compliance. Conducting travel and expense audits with lower non-compliance will be easier.
So, while making a travel policy, you should clearly define the roles of various stakeholders and set up a practical budget limit. Your policy should be understandable to the employees to comply with. Additionally, If your employees can view the policy in real-time while booking, they will be able to keep away from going over budget.
Impose expense submission deadlines for manual audits.
If your expense audits are manually undertaken, and all of your employees file expense claims close to the time of reconciliation, the auditor will be overburdened. Therefore, they will not be able to go through all the expenses to verify their validity.
Conducting travel and expense audits becomes futile if the auditors cannot adequately examine expense reports. Hence, it is essential to impose a submission deadline on employees if you plan to conduct a manual audit so that the auditors have the required time to validate the expense reports and gain insights.
Choose selective reports for a thorough examination.
If the auditors scrutinize each expense report for historical data, the travel and expense audit will become time-consuming and strenuous.
Therefore, when choosing travel and expense audit reports, they should pick their battles and select a few pieces for detailed examination. Reports from travel-heavy departments like sales will be more extensive and give a better overview of the nature of expenses.
Conduct the travel and expense audits before reimbursement.
If you conduct a travel and expense audit before reimbursing the expenses, you will save time and energy. Your finance team will not have to extract the funds issued to non-compliant claims. However, auditing before reimbursement is bound to cause more delays in the process.
Opting for automated business travel and expense management software to help employees file expense claims in real-time and send the expense reports for approval promptly will speed up the process.
How can expense management software aid seamless travel and expense audit?
An automated travel and expense management software can make the audits easier by automating your company’s travel and expense management process.
Let’s look at how automating the T&E management process will help make the audits easier.
1. Real-time receipt submission
Travel and expense management software offers digital receipt management through which your employees can submit their expense receipts as and when incurred. They can also create an expense report and send it for approval to their managers promptly. As a result, there are no data irregularities, making travel and expense audit error-free.
2. No over-budget booking
A unified travel and expense management software allows you to set a budget limit according to employee level, departments, etc., and only offers policy-compliant booking options. As a result, there are no over-budget bookings and policy violations, making the travel and expense audit faster.
3. Clear workflow
Travel and expense management software creates a detailed workflow in your organization by defining who will be responsible for which approval. Therefore, it significantly reduces the chances of the finance team approving a suspicious claim because each claim has to go through multiple checks.
Conducting regular travel and expense audits can help you control travel costs, increase travel policy compliance, and gain insights into your organization’s travel expense data.
You can enhance the efficiency of your travel and expense audit by automating your expense management process with the help of ITILITE travel and expense management software. ITILITE offers you an automated audit and fraud detection feature that automatically identifies duplicate claims and validates the expenses.
We offer a free demo of ITILITE with all the features so that you can experience improved expense management yourself.