In today’s constantly changing corporate landscape, you may be required to travel by your company, whether locally or abroad. This could be due to a variety of reasons, such as meetings, courtesy calls, business development, or project execution, to name a few. Read more
How much is it to travel from your main headquarters to your satellite office in another state? When you go around and ask your colleagues, odds are, they would have different answers.
This simple experiment shows just how easy and common it is for employees to make honest mistakes on their expense reports. The question is, however, are these really mistakes or deliberate misrepresentations? Read more
Our customers frequently ask us questions on this topic. Mainly – What is the IRS policy for a receipt? And is it only needed for expenses greater than $50? There seems to be a lot of confusion and misinformation on this topic. So, to clarify doubts, here is the scoop –
1) The IRS accepts electronic receipts, but there are a few caveats (read more on this from a previous blog article we wrote. Click here)
2) Actually, the IRS does not need a receipt for expenses less than $75 (believe it or not!). Here is the text from the IRS publication 463 that validates it –
What Are Adequate Records?
You should keep the proof you need in an account book, diary, log, statement of expense, trip sheets, or similar record. You should also keep documentary evidence that, together with your record, will support each element of an expense.
Documentary evidence. You generally must have documentary evidence, such as receipts, canceled checks, or bills, to support your expenses.
Exception. Documentary evidence is not needed if any of the following conditions apply.
- You have meals or lodging expenses while traveling away from home for which you account to your employer under an accountable plan, and you use a per diem allowance method that includes meals and/or lodging. ( Accountable plans and per diem allowances are discussed in chapter 6.)
- Your expense, other than lodging, is less than $75. <——
- You have a transportation expense for which a receipt is not readily available.
If you want to read the entire publication, it is available here. Hope you found this article to be useful! Now you can light a mini-bonfire and burn those <$75 receipts.
Please note that this is NOT legal or tax advice. Please contact your attorney or accountant for more information.
If you think you have strange expense reports, you must see this! Robert Half Management Resources survey interviewed several CFOs and asked them to name the most unusual things they have seen employees include in expense reports. The results – bound to raise both eyebrows! Here are a few of the most questionable items:
– Cosmetic surgery
– Lottery tickets
– Pet food
– A trailer rental for a family reunion
– $12,000 for a family trip-+
– A teepee
– A fine for crashing into a toll booth
The survey was developed by Robert Half Management Resources, and it was conducted by an independent research firm. The survey included responses from 1,600 U.S. and Canadian CFOs from a random sample of companies with 20 or more employees.
The list also included gadget, leisure and hobby expenses:
– A person lost his personal cell phone somewhere in the office, so he submitted the cost of a new one
– Movie tickets
– Hotel charge for viewing adult movies (Yikes!)
– Day at the spa
– A golf trip for the employee and his three friends
– Video game console (PS4 maybe?)
Personal expenditures were frequently cited by executives as questionable. Here are some examples:
– Grocery receipts
– Pair of socks
– Toilet paper
– Hot tub supplies
– Golf clubs
– Expensive lunch for the employee, without clients
Expenses covering the cost of personal celebrations and not related to the office was equally if not more surprising:
– Flowers the employee bought for his wife
– Expenses for his son’s birthday party
– Wedding anniversary dinner
Anyone submitting an expense report should double and triple check their expenses to avoid this situation, which could definitely land the employee in hot water. One respondent said “The most unusual thing I saw was a submission for something that had already been expensed and reimbursed”
(Sourced from Robert Half Management Resources)
When you think of expense reports, you also think about its vulnerability to fraud. While there are tools and systems to better tackle fraud, consistent auditing still plays a vital role.
Last year, the Association of Certified Fraud Examiners (ACFE) reported that nearly 15% of all fraud in the workplace was related to T&E expense reporting. According to the same report, the median financial loss to an organization for a single instance of expense fraud is $26,000, and the median duration of the fraudulent activity is two years. That is a lot of money and a long duration.
Earlier this year, AirPlus International fielded a survey to corporate travel managers to explore how they manage expense fraud in the travel category. 35% of the respondents reported that they manage both travel and T&E within their organizations. Another 15% of the respondents identified their official role as a travel manager but were closely involved in creating T&E expense policy as it relates to travel. On the other side, only 30% of travel managers said their company’s travel policy had any guidelines for T&E expenses. 7% of the respondents said they were not involved at all with T&E expenses.
Of the 119 surveyed, 8% of the respondents reported that their companies had uncovered significant fraud in T&E expense reporting over the last two years while 19% said that they didn’t know of any significant fraud. For the 8% of respondents, the most common behavior was falsifying or altering receipts to inflate reimbursements. Additional common fraudulent behaviors include submitting too many “below-the-line” expenses (expenses below a certain $ value that do not require receipts per a corporation’s T&E policy), exchanging premium-class tickets and reclaiming receipts.
The survey respondents utilized safeguards in place at their organizations for preventing and detecting fraud. The most common prevention tactic, cited by 81% of the respondents, was to include direct manager approval for all T&E expenses. 67% of respondents said their companies required receipts for all expenses incurred during travel, while 59% required the use of a corporate card for T&E expenses.
To read the full report by AirPlus International click here
Maintaining compliance and increasing visibility are the key factors in prevention of T&E fraud. Surprisingly, the ACFE reports that most workplace fraud is initially discovered from a tip provided by a co-worker. However, to take action, the tip must be backed up by facts and data.
Here is a video on T&E expense fraud which you may find useful –
Contact us for more information or if you have any specific questions we can help with at email@example.com
Expense report padding may seem like a harmless offense and a common thing. But it still constitutes as fraud. Here are 8 cases where employees and public officials got caught cheating big.
PS: If your bill for a bagel and diet soda is $177, you better be eating that while riding a unicorn to Tiramisu mountain!
Here is an interesting article from the Huffington Post on 10 ridiculous items for which employees tried to get reimbursement.The list is very interesting and diverse! Would love to hear your comments….
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