By conducting regular audits of T&E expenses, organizations can improve controls over employee costs and clearly establish a tone of compliance for all employees to follow. Internal auditors can test those controls and will often find errors and fraud in reimbursement amounts during a review of T&E expenses. Organizations with total annual T&E administrative expenses that are second only to payroll 1 in operating expenses should realize the value of implementing and maintaining effective internal controls. In other cases, T&E processing procedures were not automated sufficiently to do more than sampling of controls or testing of these expenditures, along with other accounts payable activities. Frequently, T&E violators were executives or others considered above scrutiny because of the perceived significant value the employee added to the company. What many companies discovered was that controls over T&E expenses were weak or ineffective. Requirements in the Sarbanes-Oxley Act of 2002 caused companies to review the adequacy of internal controls over all expenditures, including T&E expenses. 16Ĥ WHY AUDIT INTERNAL CONTROLS OVER TRAVEL AND ENTERTAINMENT (T&E) EXPENSES? Travel and entertainment (T&E) expenditures are often a significant business expense and may determine the difference between generating a profit or loss for the period. 9 Meals Entertainment Non-Allowable Expenses Handling Travel Advances Expense Authorization, Reimbursement and Reporting Step 3: Report Writing Phase Step 4: Open Issue Follow-up Phase Conclusion Appendix A: Benchmarking T&E Expenses Internal Controls Progress Appendix B: Business Credit Card Merchant Category Codes (MCC) Appendix C: Commercial Airfare Class of Service References. 6 Other Areas and Tests: Transportation Expenses. 1 What Do Auditors Need to Successfully Conduct an Audit of T&E Expenses?. No part of this publication may be reproduced, transmitted, transcribed, stored in a retrieval system or translated into any language in any form by any means without the permission of CaseWare IDEA Inc.ģ TABLE OF CONTENTS Why Audit Internal Controls Over Travel and Entertainment (T&E) Expenses?. 469 King Street West, 2nd Floor Toronto, Canada M5V 1K4 IDEA is a registered trademark of CaseWare IDEA Inc.
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is a subsidiary of CaseWare International Inc., the world leader in business-intelligence software for accountants, auditors and other professionals. is a privately held software development and marketing company, with offices in Toronto and Ottawa, Canada, related companies in the Netherlands, China, and distributor partners serving over 90 countries. 1 AUDITING TRAVEL AND ENTERTAINMENT (T&E) EXPENSES USING IDEA A CaseWare IDEA Research ReportĢ CaseWare IDEA Inc.