Use these simple procedures to ensure accurate records and protect your company from fraud.
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by Stephen Sylvester
Stephen Sylvester, CPA helps CPA and finance firms turn expertise into new clients. By transforming esoteric technica...
Updated on: April 13, 2023 · 3 min read
Several key policies can significantly reduce the risk of expense reimbursement fraud and improve your company's financial record keeping. Implementing these ideas before problems arise will save your business time—and money—in the long run.
Business owners often find it convenient to have employees pay for incidental expenses. This can include business meals, travel expenses, and small purchases of office supplies or equipment. Employees generally expect reimbursement for expenses they pay on behalf of their employer.
At a minimum, companies should require a form called an expense report for all employee reimbursements. Employees—and sometimes partners and shareholders—use this form to report expenses they pay for the business.
Details provided on the expense report include the date paid, vendor name, the amount paid, expense description, and totals for each expense category.
Some businesses use paper expense reports. However, expense reporting software can make completing and processing expense reports easier. This usually leads to more accurate information and a better experience for both employees and business owners.
Microsoft's free expense report template provides a good example of a basic electronic expense report. This template captures all information required without overwhelming the employee—it fits on a single page.
Requiring expense reports represents a great first step in ensuring accurate expense reimbursement. However, several other policies offer important benefits. Expense reimbursement best practices include:
Requiring expense reports to follow these best practices will help you maximize your company's tax deductions while reimbursing employees the correct amount. Expense reimbursement fraud can cost hundreds of thousands of dollars and require hundreds of hours to deal with. These simple policies make fraud significantly more difficult and less likely.
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