(800) 931-6557
(800) 931-6557
ASP
  • Home
  • Services
    • Accounting
    • Accounting FAQ
  • Recruiting
    • Services
    • Recruiting Team
    • Our Process
    • Recruiting Podcast
    • Top Candidates
    • Recruiting FAQ
  • Openings
  • Locations
    • Oregon >
      • Oregon Accounting
      • Oregon Bookkeeping
      • Oregon Team
    • Washington >
      • Washington Accounting
      • Washington Bookkeeping
      • Washington Team
    • Colorado >
      • Colorado Accounting
      • Colorado Bookkeeping
      • Colorado Team
    • Texas >
      • Texas Accounting
      • Texas Bookkeeping
      • Texas Team
  • About
    • Clients
    • Testimonials
    • Inclusion at ASP
    • Resources
    • Submit Resume
  • Blog
  • Contact
  • Payments
  • Home
  • Services
    • Accounting
    • Accounting FAQ
  • Recruiting
    • Services
    • Recruiting Team
    • Our Process
    • Recruiting Podcast
    • Top Candidates
    • Recruiting FAQ
  • Openings
  • Locations
    • Oregon >
      • Oregon Accounting
      • Oregon Bookkeeping
      • Oregon Team
    • Washington >
      • Washington Accounting
      • Washington Bookkeeping
      • Washington Team
    • Colorado >
      • Colorado Accounting
      • Colorado Bookkeeping
      • Colorado Team
    • Texas >
      • Texas Accounting
      • Texas Bookkeeping
      • Texas Team
  • About
    • Clients
    • Testimonials
    • Inclusion at ASP
    • Resources
    • Submit Resume
  • Blog
  • Contact
  • Payments

​In Pursuit of Profit

Read our expert article below or sign up to get articles sent to your inbox.​

8/14/2023

Comments

Improving Cost Reimbursement to Prevent Fraud and Avoid an Audit

 
Expense reimbursement is one of the most common areas where businesses go wrong with their accounting. Some cost reimbursement overstatements are simple mistakes (misunderstanding what does and does not count as a valid business expense), while others are fraud plain and simple (submitting fictitious expenses or padding expense reports). 
Picture
The word “reimbursement” in a text bubble.
​Whether the problem is nefarious in nature or not, incorrectly accounting for expense reimbursements can open a business up to an IRS audit. Being audited consumes time and resources even if the business being audited prevails. However, it can also cost a company in fees and penalties if misreporting problems are discovered. For this reason, improving cost reimbursement policies and processes should be a top priority for companies that want to not only mitigate fraud risk but also reduce their likelihood of being audited. 
​Creating a Formal Reimbursement Policy
You cannot improve what you are not actively managing, which is why having a formalized expense reimbursement policy in place as part of your overall accounting procedures manual is so critical. Clearly communicate with employees and management what can be expensed and how soon it needs to be submitted to avoid any ambiguity. And then stick to the policy! Where there is ambiguity or uncertainty, make it clear to employees that they are always welcome to ask questions about what is able to be expensed when there is a business case to be made for doing so.

Remember, a policy becomes meaningless if employees do not think they need to follow it. If management acts like they are above the rules or they let it slide when their employees are being lax with their expense report totals or timing, a culture will emerge that is indifferent to the policies that are in place. At that point, you might as well not even have policies in place because they are not doing any good (other than perhaps serving as merit for firing an employee who is exhibiting poor ethics).

Implementing Internal Controls
Minimize the opportunity for cost reimbursement fraud, by utilizing internal controls such as:
  • Practicing separation of duties between employees that are submitting, approving, and granting reimbursements.
  • Using access controls to prevent access to reimbursement requests and distributions.
  • Requiring manager approvals on large or frequent expenses.
  • Utilizing a standardized expense report template or accounting-integrated reimbursement app.
  • Conducting periodic reimbursement audits to ensure receipts match up with reimbursement payments.
  • Backing up reimbursement files to protect them from loss in the event of an unforeseen event.

Taking these steps erects higher barriers that mal-intentioned employees would need to overcome in order to commit fraud, thereby mitigating fraud risk to better protect the organization’s assets.

Utilizing Reimbursement Solutions
Organizations that are still requiring manual reimbursement requests will find huge efficiency gains as well as a significant increase in fraud prevention by switching to a cost reimbursement solution. There are so many standalone expense reimbursement solutions these days that streamline documenting, categorizing, approving, and paying out reimbursements. Most of these platforms also have apps that allow remote employees and/or employees in the field to submit reimbursement requests on the go to speed up the process and improve employee satisfaction with the process.

When evaluating expense reimbursement software ensure that whatever you select will easily integrate with your existing accounting platform to avoid needing to do any API integration or workarounds to get them to “talk” to each other. Your accountant should be able to give you advice on which software will make the most sense for your unique business needs.

Conducting Reimbursement Audits
Audits are a key part of internal controls, especially among companies that have a significant portion of their employees working remotely, where internal controls are more likely to fail. However, because they have not historically been easy to do, some companies do not do them as often as they should (or at all). If you are using expense reimbursement software, lean on it to help you simplify the process. Regularly check reimbursements to verify that they are within budget and do not raise any fraud red flags. Conducting regular audits not only helps to prevent fraud and minimize audit risk, but also aids in overall strategic business management by helping to measure current business activities against budgeted values.

When you need help with cost reimbursements and other accounting functions, look no further! We offer US-based outsourced accounting services to businesses and nonprofit organizations on a part-time and limited-time basis. Find out more today!
Comments

    SUBSCRIBE:

    DOWNLOAD:

    The Ultimate New Business Formation Checklist

    DOWNLOAD:

    Accountant Evaluation

    Categories:

    All
    Accountant
    Accounting
    Accounting Systems
    Artificial Intelligence
    Audit
    Bank Reconciliation
    Benefits
    Bookkeeper
    Bookkeeping
    Brand
    Budgeting
    Business Analysis
    Business Trends
    Career
    Cash Flow
    Change Management
    Checklist
    Closing The Books
    Colorado
    Community
    Contracts
    Controller
    Depreciation
    Ecommerce
    Economy
    Finance
    Fraud
    Government
    Hack
    Hiring
    HR
    Infographic
    Internal Controls
    IRS
    Laws
    Leadership
    Legal
    Local Economics
    Manuals
    Market Trends
    News
    Nonprofit
    Online Bookkeeping
    Oregon
    Outsource
    Payroll
    Payroll Taxes
    Planning
    Procedures
    QuickBooks
    Record Keeping
    Recruiting
    Recruiting Market Reports
    Remote Workforce
    Reporting
    Restaurants
    Risk
    Sales Tax
    Scam
    Security
    Small Business
    Social Media
    Software
    Startup
    Statistics
    Strategy
    Taxes
    Technology
    Texas
    Time Management
    Washington State

    Archives:

    June 2025
    May 2025
    April 2025
    March 2025
    February 2025
    January 2025
    December 2024
    November 2024
    October 2024
    September 2024
    August 2024
    July 2024
    June 2024
    May 2024
    April 2024
    March 2024
    February 2024
    January 2024
    December 2023
    November 2023
    October 2023
    September 2023
    August 2023
    July 2023
    June 2023
    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    June 2015
    February 2013
    October 2012
    November 2011
    May 2011



    RSS Feed

Services

Accounting Services
Recruiting Services

​

Company

About
Oregon Team
​Washington Team
Colorado Team
​Texas Team
Clients


Support

Contact
CC
FAQ
​Resources
​Blog
​

ASP

Your resource for accounting & recruiting services. Serving Seattle, Bellevue, Redmond, Kirkland, Portland, Beaverton, Hillsboro, Lake Oswego, Denver, Lakewood, Aurora, Dallas, Frisco, Fort Worth, and more.
Contact us today for a free,
no-obligation consultation:
Toll Free (800) 931-6557
WA (425) 492-1901
OR (503) 473-0122
​CO (720) 572-8211
TX (214) 396-7403

[email protected]
© COPYRIGHT ASP - ALL RIGHTS RESERVED 
 A CFO Selections Company
Privacy Policy
Photos from Pricenfees, Debbieallendale