does anyone have an audit program for travel and expense? i want to have as many example controls as possible.

Question

if i was tasked to audit travel and expense for my company, what controls should test for?

Thanks to those who responded. I thought it'd be helpful to give some examples of what I am looking for (tests in an internal T&E audit for fraud, compliance and operational efficiency):
1. duplicate expense payments
2. payments that went to a spouse
3. expenses reported for 'blacklisted' vendors
4. vendors where the banking routing number = banking routing number of employee.
...
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So I'm hoping to get as many such controls/rules so I can test them against our internal T&E process.
Thanks!

Answer 1

tests in an internal T&E audit for fraud, compliance and operational efficiency:
1. duplicate expense payments
There should be a control policy w/c state that:

a. All expense voucher packages including ALL its supporting documents should be stamped with the word "PAID" or "PROCESSED" on the documents faces by the cashier upon reimbursement of the expense or by the Accountant preparing checks to reimburse employees or for payment to oher companies. This would limit or reduce the opportunity to re-use previously paid vouchers and expense for double payments. Scan or check all voucher packages if this is implemented. If not implemented at all, there is strong possibility of double payments hence a larger audit sample has to be examined to include material transactions with constantly used vendors/ third party companies. If it is implemented but not consistently applied (there were several processed voucher packages not stampped), there is reasonable possibility of double payments.

To check for this, be specially alert for :

a. Photocopied supporting documents (this should not be accepted when expense vouchers are being processed, if it is unavoidable there should be a written explanation attached to it.) If you find Photocopied supporting docs, flag it and check other vouchers with the same vendor to see if the photocopied document was previously used.

b. Check if the use of expense vouchers are sequential according to their printed seral number. If not, its an audit finding since it will be difficult to ascertain the completeness of your audit sample and population until after an inventory of used and unused serially numbered expense vouchers is consducted;

c. Check for manual or machine alterations in the supporting documents such as change of document serial number, dates and amounts;

d. Check for different colored official receipts. Most hotels and restaurants provide original (White) Customer Official Receipts. If a receipt of a different color appears as supporting document whereby previous expenses presented a White receipt, it is possible that the employee and a hotel or restaurant employee is in connivance and providing a second copy of receipts for second reimbursement. Validate and inquire why not an original docuemnt is presented.

2. payments that went to a spouse

a. Secure a list of allowed and reimbursible expenses. Any reimbursed expense not included in the list should be questioned and require a response from the employee who processed it and the employee who claimed the reimbursement. If the expense is found to be reasonable and recurring, recommend that it be included in the allowed expense list. If this is a case to case basis, require that a written approval from Management be attached to the voucher before processing the reimbursement or payment.

b. Always scan and validate transaction dates and location on all supporting documents. These should co-incide with the offical travel date and location of the employee. Check the address of vendors / hotels / restaurants from the receipts;

c. Take a sample of some expenses and directly confirm through telephone or email if the details of the receipts presented match the details in the vendors' duplicate copies or records. Verify document serial numbers, date, amount, credit card numbers and names and items purchased and location delivered if applicable;

d. if the reimbursible expense is for an unconsummable item, require the employee to physically show you the item to inspect it if its according to specifications according to documents and tag it as it is a company asset.

3. expenses reported for 'blacklisted' vendors
Get a list of blacklisted vendors and check through the company's payment or Accounts Payable database when was the last date and transactions made from these vendors. If it shows that there were transactions in the period ebing audited, ask for explanations and include in your report.

In case that there were transactions not included in the database, manually scan payment document files to check if there were transactions made with these blackilisted vendors.

4. vendors where the banking routing number = banking routing number of employee.

Get a list of all vendor banking routing number, take a reasonable sample which can include the frequently used banking routing number, the less frequest but material payment made, and call these vendors to confirm if they own the routing numbers.

There are still a lot of audit techniques and procedures that can be done through or using the computer but these are tha basic ones that you may need in the scenario that you have provided. I hope this helps you. Good Luck

Answer 2

Expense Report Audit Program

Answer 3

From the Princeton University Office of Internal Audit modified for your purpose

Suggested Accounting System

The Company accounts in the financial reporting system should be sufficient to record travel expense. Travel advances are assets until the trip has taken place; accordingly, they should be charged to prepaid accounts and matched to Business Travel Expense Reports when received. When the Business Travel Expense Report is completed and the advance accounted for, charges should be removed from the pepaid accounts and charged to expense.

Suggested Control Procedures
Departmental employees responsible for approving travel must be knowledgeable in Company policies on the allowability of travel costs. Their signature approval signifies that the cost is proper and allowable at the department level. The department is primarily responsible for the accuracy of the Business Travel Expense Report.

The traveler must sign Business Travel Expense Reports. The traveler’s supervisor who has personal knowledge of the trips taking place has primary responsibility for the approval of the Business Travel Expense Report . In no instances should the traveler's subordinate approve the Business Travel Expense Report without following the procedure outlined in the travel manual regarding the delegation of authority.

Departments should consider a system of advance approval for all travel rather than consider only after the fact reimbursement for trips taken and expenses incurred. An independent reconciliation of department copies of travel forms to statements of account should be performed periodically including a comparison of costs to budget by knowledgeable individuals.

Self Evaluation - TRAVEL
1. Business Travel Expense Reports should be used for all business related travel and not miscellaneous invoices.
2. Does the traveler sign the Business Travel Expense Report ?
3. Does the traveler’s supervisor who has knowledge of the trip and acknowledges its business-related purpose sign the Business Travel Expense Report ?
4. Are travel advances properly approved, accounted for within the department as assets and followed up to see that the traveler correctly included them on the Business Travel Expense Report ?
5. Is the Business Travel Expense Report filed timely? (within 10 working days of the traveler's return to the office).
6. Does a Business Travel Expense Report cover an entire trip? (there should be no cases where one voucher is filed for airline costs, and later another for hotel, and a third for meals and other expenses, etc.).
7. Is only one trip accounted for on one Business Travel Expense Report ? (there should be no cases where several trips are covered on one voucher or one voucher covers a 4-month period, containing numerous trips, etc.).
8. Does the department and traveler have a current copy of the Company travel procedures?
9. Does the department review Business Travel Expense Reports to see that all required receipts are attached prior to sending to the Controller for reimbursement? (Departments should not submit incomplete vouchers in the hopes that errors will be caught by the Controller's Office).
10. The supervisor’s signature certifies that all costs are allowable. Is the supervisor aware of this and what constitutes an unallowable cost?