Travel and entertainment (T&E) expenses tend to comprise a big part of organizations’ budgets, so allowing manager approvers to neglect their duties can lead to undesirable results—blown budgets, non-compliant expenses, or even fraud. What can you do? Recharged Education invited Mary S. Schaeffer, AP Now, to share some insight on this issue.
Who’s Watching the Store:
Making Approvers Responsible
by Mary S. Schaeffer, AP Now
One of the ongoing issues for those who process expense reports are managers who approve subordinates’ reports without ever reviewing the included information. When this occurs, employees soon realize it and a few will take advantage. The challenge is to make managers responsible for what they approve.
As part of the third quarter AP Now 2016 Fraud Survey, participants shared recent examples of fraud in their organization. Following is an interesting twist from one company on the problem of approving without reviewing.
An administrative assistant who processed expense reports for several consultants had access to their Corporate Card numbers. She used them to purchase items online for herself and then hide them in the consultants’ expense reports that she prepared.
Who is Responsible?
Clearly the assistant is guilty, but the lion’s share of the blame lies with the consultants. They were the ones who signed and submitted the expense reports. The fact that they didn’t review before signing does not lessen their culpability. It was their name on the reports.
Employees who understand how your processes work are, unfortunately, in the best position to take advantage of weaknesses. That is precisely what happened here. What is especially intriguing is the new ways devious employees find to take advantage. Whether an admin is preparing expense reports for consultants, executives or managers, the ultimate responsibility for what’s in the report is with the person who approves it. They must be held accountable for reviewing before signing.
What To Do
While firing a manager for a lack-of-review infraction is probably overkill, this issue can and should be part of their annual job performance review, and factored into their raise and/or bonus. This would be a policy change for most organizations. How can you institute it?
- Document instances where managers have approved something that is clearly inappropriate. This will demonstrate the extent of the problem within your organization and help you with step 2.
- Get senior management support for making these infractions part of performance reviews and incorporating related language into your travel policy. If you have a cover letter on your policy from a high level executive, it should be mentioned there.
- Inform employees of the new policy.
Finally, if you are having trouble getting this approved, consider the following. If managers are just approving what is placed in front of them, travelers are effectively approving their own expense reports. This is a segregation of duties problem, a poor internal control and, for public companies, a possible Sarbanes-Oxley issue.
Wondering About Other Organizations’ T&E Policies?
Gain insight that could help your organization improve its travel policy. AP Now is currently conducting a survey to determine common T&E issues, how organizations respond, and details about their policies. Survey participants will:
- receive an Executive Summary of the results, and
- be invited to a one-hour webinar where the results are discussed and best practices identified
Click the button above or copy and paste the link into your browser:
About the Author
Mary S. Schaeffer, a nationally-recognized accounts payable consultant, is the creator of the AP Now website. She speaks regularly at live and online events; has written 18 business books, most focused on accounts payable issues; and has created many CPE courses for CPAs. Additional information can be found at www.ap-now.com.
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