Build a Foundation for Successful Audits

What do home remodeling projects and P-Card audits have in common? Unexpected surprises—usually not the good kind—are one commonality. Whether a home or card program, something that appears to be sound might have issues lurking that only remodeling or auditing, respectively, will uncover. Another big commonality between the two, as observed by Doug Hindsley, is the do-it-yourselfer who cuts corners and/or lacks the expertise to effectively do the job. Ultimately, this can cost more than hiring a professional from the start. As the senior partner of Card Integrity, a company with solutions to improve the success of your card programs, Doug has data to back up his observations. I first interviewed him about the auditing process in 2017 (see link to that post at the end), so I was thrilled to do so again recently. His insights below include common surprises you can minimize through robust policies, how to help managers be more successful, and tips for organizations who do their own transaction auditing (the DIYers).

Common Surprises

For home projects and card programs alike, surprises typically mean more money is shelled out. Card Integrity’s proprietary analysis of literally millions of card transactions over the years has resulted in some recurring findings of added expenses that usually surprise their end-user customers. Two examples are:

  • the high number of Amazon prime memberships the organization is unknowingly paying for, even if/when an organization is moving to Amazon Business

  • how much the organization is paying for employee recognition gifts and awards (e.g., flowers, gift cards, special lunches, etc.)

To avoid these surprises at your organization, ensure the card program policies clearly address both. Describe what is and is not allowed, any special procedures or approvals required pre-purchase, and the appropriate supporting documentation to provide with the expenses.

The Offenders

I also asked Doug who Card Integrity most often sees as a policy offender. He confirmed what I have read elsewhere, such as in the annual Report to the Nations by the Association of Certified Fraud Examiners (ACFE). Contrary to popular belief, new employees are not the only offenders. Policy infractions as well as fraud happen at every job level, regardless of an employee’s length of service. Doug mentioned one recent case of a VP who made personal purchases of cashmere scarves and yet they made it through the approval process.

Just as a good contractor monitors the work in progress, anyone who fulfills an oversight/approver role for the card program must be diligent in their reviews of employees’ expenses. However, we all know that this is hit or miss, which is a significant issue. My own informal research has revealed most organizations do not apply any consequences to manager-approvers who flounder or fail at their card program role. As such, the poor behavior never improves.

Helping Managers Be More Successful

As Doug and I discussed, managers are overloaded, so they rubber stamp everything in an effort to just keep up. I published a related blog post a few years ago, Give Your Managers a Life Preserver. Card Integrity supports the preservation cause by offering concise reports, such as 20 lines of “weird stuff” that managers should take a closer look at. This greatly alleviates the burden on managers to find a needle in a haystack, saving valuable time. Doug shared that, as a result, some of their corporate clients do not even require managers to look at every transaction anymore (even though they still have access to the data).

Regardless of your organization’s approach to auditing, help your managers be more successful by training them on what to look for when reviewing expenses and when they should dig deeper. Determine what reports you can provide to support them.

About Those DIYers

If your organization decides to tackle the auditing of card transactions on your own, utilize whatever tools are available, even if it is just Microsoft Excel, and be thoughtful about the receipt aspect. Too often, Doug sees that receipt confirmation is merely a checkbox on the audit form; there is little to no review of what was purchased. In some cases, the “auditor” is someone who may not know whether a particular purchase is allowed; for example, higher education institutions who pay a student to do the auditing. Whenever possible, take advantage of Level III transaction detail instead of doing a receipt review for the applicable vendors.

Finally, Doug stresses the importance of being timely, visible, and consistent with your audits. Cardholders often feel picked on when they are singled out for an innocent mistake, especially if the same mistake is made by someone else who does not get called out. To make audit results less personal, report on the aggregate or by department. Don’t forget to include positive results as well.

For more on Doug’s insights, access the 2017 post, Rethinking the Audit Process, which describes how to address chronic problems, frequently overlooked audit criteria, the drawbacks of manual audits, and more.

Photo by rawpixel on Unsplash

Photo by rawpixel on Unsplash

About Card Integrity

Card Integrity expense solutions further examine your spend data to detect hidden fraud, target policy compliance, and alert employees to smarter spending habits. Combined with advanced analytics, Card Integrity delivers powerful insights with prioritized reporting and relevant communication. By monitoring expenses, validating receipts, and training cardholders, the suite of expense solutions helps leading organizations to effectively manage spend.

Card Integrity takes service to the next level with flexible, custom reporting; easy onboarding; and ongoing assistance. Companies of all sizes and industries, including top U.S. and global companies, colleges and universities, and government agencies, support card and payment programs with Card Integrity solutions to get spending under control.

To learn more about Card Integrity, visit our website to ask for a case study at: Better yet, meet us in person at the NAPCP Commercial Card and Payment Conference next month and visit our table in the exhibitor hall. We look forward to seeing you there and finding out how we can help your program to grow!

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

Subscribe to the Blog

Receive notice of new blog posts.