{"id":2231,"date":"2015-06-30T16:14:35","date_gmt":"2015-06-30T16:14:35","guid":{"rendered":"https:\/\/www.peeriosity.com\/shared-services\/articles\/?p=2231"},"modified":"2022-08-09T08:24:02","modified_gmt":"2022-08-09T08:24:02","slug":"developing-an-effective-audit-and-control-structure-for-the-travel-expense-process","status":"publish","type":"post","link":"https:\/\/www.peeriosity.com\/shared-services\/articles\/2015\/06\/developing-an-effective-audit-and-control-structure-for-the-travel-expense-process\/","title":{"rendered":"Developing an Effective Audit and Control Structure for the Travel Expense Process"},"content":{"rendered":"

Centralizing travel expense report processing as part of Shared Services requires a more sophisticated approach, with travelers and reviewing managers located hundreds, if not thousands, of miles away from the processing center.\u00a0 Yes, placing responsibility and accountability with the department manager responsible for the expense is necessary, but that does not fully excuse Shared Services from fiduciary responsibilities to ensure adequate business controls<\/a> are in place.\u00a0<\/span><\/p>\n

A PeercastTM<\/sup> in Peeriosity\u2019s Corporate Card research area<\/a> featured a large global consumer products & services company, discussing their approach to audit and control for the Travel Expense process.\u00a0 The basic profile of their environment includes AMEX as the card provider, Concur for expense reporting, SAP for their ERP, and over 8,000 cards in use for their North America operations.\u00a0 The company leverages a global structure that includes both regional and country-specific travel and entertainment policies.<\/span><\/p>\n

The feature company created a four-part approach to audit and control, using: 1) Internal company resources from the Card Administrator Team, 2) AMEX, 3) Concur Audit, and 4) a purchased solution called Oversight Insights on Demand for T&E.<\/span><\/p>\n

The Card Administrator Team audit review includes monitoring for unassigned transactions for possible policy violations and the use of blocked MCC Codes.<\/span><\/p>\n

The Concur system is configured to identify possible problem transactions before the report is submitted, with soft warnings and hard warnings that must be corrected before submission.\u00a0 The system also generates email reminders about unassigned transactions and personal expenses.\u00a0 For the Concur audit, rules are in place to pull items for review based on specific criteria that can include:<\/span><\/p>\n

    \n
  1. A duplicate transaction<\/span><\/li>\n
  2. Large entertainment amounts<\/span><\/li>\n
  3. High mileage or use of a personal car<\/span><\/li>\n
  4. Miscellaneous codes or other non-travel codes<\/span><\/li>\n
  5. All members of a senior leadership team<\/span><\/li>\n
  6. A random percentage of other reports (for example, 1% of all reports are selected for audit)<\/span><\/li>\n<\/ol>\n

    The Oversight tool takes a data feed from Concur and analyzes all expense reports and card transactions and then highlights the highest risk travelers, merchants, and merchant categories.\u00a0 The tool provides visibility to root causes to identify training needs, create policy awareness, and flag potential abuse.\u00a0 The audit is performed with very little effort, requiring about one day a week for one person to complete.\u00a0 The tool uses sophisticated logic to look at relationships in the data and provides a list of indicators for what is considered a suspicious transaction.\u00a0 For example, for a transaction by an employee shopping at \u201cWolf Camera\u201d, the following indicators were reported:<\/span><\/p>\n

      \n
    1. Transaction in a high-risk merchant category:\u00a0 Camera and Photographic Supply<\/span><\/li>\n
    2. Transaction made on a weekend<\/span><\/li>\n
    3. Moderate risk because MCC is moderately used<\/span><\/li>\n
    4. Expense type rarely used for MCC<\/span><\/li>\n<\/ol>\n

      Supporting iPollingTM <\/sup>questions evaluated how member companies approach the auditing of expense reports.\u00a0 For 26% of the companies, a \u201chigh control environment\u201d is in place to ensure policy compliance<\/a> and fraud mitigation.\u00a0 For 65% of the companies, there is a \u201creasonable balance between controls and resource requirements to conduct audits\u201d.\u00a0\u00a0 Obviously, with thousands of reports, the best way to reduce the cost of compliance is to increase the sophistication of the tools used to flag possible exceptions.\u00a0 Here are the details:<\/span><\/p>\n

      \"response<\/p>\n

      The second iPollingTM<\/sup> question asked about the status of using a formal process for collecting and analyzing data coming out of the audit process for the purpose of improving the overall process.\u00a0 72% of member companies have implemented this idea, with 23% currently evaluating the opportunity.<\/span><\/p>\n

      \"ipolling<\/p>\n

      While some level of misuse is more likely than intentional fraud<\/a>, both are costly.\u00a0 The good news is that processes and tools are available to significantly mitigate and, in many instances, eliminate the risk.<\/span><\/p>\n

      Here are several of the comments added by iPollingTM<\/sup> participants:<\/span><\/p>\n