How to manage the travel expense audit process
A corporate travel policy that covers everything employees need to know about corporate travel expenses is just the first step. Travel expenses are large overheads that can significantly impact your bottom line, which is why finance teams must conduct regular travel expense audits to keep your costs in check. In this guide, we explore why travel expense audits matter and share best practices to improve your audit procedures to help you save time, reduce costs, and protect your bottom line.What is a travel expense audit?
Employees must save all receipts related to business trip expenses, including hotel and airfare costs, meals and drinks, and other expenses. After returning from their trips, employees submit receipts, travel expense forms, and other supporting documents for approval and reimbursement.An audit examines employees’ business travel expenses for several reasons:- To identify errors in submissions, whether due to confusion over the travel expense policy or potential expense fraud
- To evaluate the reasonableness of the items being claimed
- To assess how well the submissions and supporting documents adhere to the company’s travel expense policies
Travel expense audits are vital for controlling costs, gaining insights into spending data, ensuring policy compliance, and for the vouching of traveling expenses to help identify irregularities and expense fraud.What challenges are involved in conducting a travel expense audit?
1. Manual expense management processes
Using manual methods for travel expense management, such as requiring paper receipts and using spreadsheets can create a disorganised travel expense audit process.For bigger businesses, this often means spending excessive time double-checking information. Expense management automation reduces the burden on teams and enhances accuracy in travel expense tracking. 2. Complicated travel expense policies
Overly complex and lengthy company policies can often lead to accidental noncompliance, as employees may skim instead of reading them thoroughly.A clear, simple travel reimbursement policy makes it easier to complete everything on your travel expense audit checklist. 3. Increases in expense submissions
As businesses grow, so too does the number of travel expense submissions.When many employees manually submit expenses, audits become harder to manage leading to unaddressed discrepancies and a slower response to any issues.How the travel expense audit process is managed
Travel expense audits are performed by auditors who compile reports based on the information they find. his travel expense report audit checklist will help you navigate the entire review process.1. Review of expense reports
The auditor will first conduct a thorough review of travel expense financial information by matching receipts with travel expense submission records. For this first step to go smoothly, it’s important to implement an organised expense system.2. Evaluation of travel expense policies
Auditors will also review your corporate travel and expense policies to assess how well managers follow policy rules and how efficient they are at enforcing them, too.3. Examination of suspicious travel expense claims
Auditors may follow up with employees directly on any expenses that look out of scope or beyond reasonable policy limits.4. Verification of financial records
During this phase, auditors will recalculate and investigate information to resolve all red flags. Cleare, well-defined travel expense processes can reduce the need for future audits.Travel expense audit best practices
Travel expense audits are essential to ensure that internal controls are working, that employees are following travel policies, and you’re not losing unnecessary money during the process.Here’s how to run an audit smoothly and keep your travel spend in check.1. Conduct audits before expense approvals
Conducting pre-approval audits in accounts payable ensures submissions align with the policy before reaching managers. This step reduces rejections, minimises recovery efforts on non-compliant expenses, and saves managers time.3. Enable employees to use corporate credit cards
Implementing a corporate credit card program allows for better tracking and management of employee travel expenses. For larger companies, verifying every receipt against expense reports can be time-consuming. Corporate cards help reduce the manual work needed to access travel expense audit information.4. Uphold submission timeframes
Give employees a timeframe for submitting expenses. Delayed expense submissions can complicate the travel expense audit process and leave you without a full view of all business expenses.5. Automate travel expense management
Automated systems enable employees to upload expense documentation into a centralised platform, promoting transparency. Companies can set up reports that require multiple approvers, and workflows can be implemented to simplify expense processes.Automated travel expense management makes for a smoother, clearer, and more streamlined process. In turn, travel expense audits also become easier to complete. There are various travel expense management software tools suited to different business needs. With TravelPerk, you can set up an automated travel and expense process in just a few clicks. You can select an integrated expense management system such as Expensify, Yokov, or Paykawk. ou can also integrate your own systems with TravelPerk’s expenses API—whichever best suits your business and audit requirements.?)
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