Employee Expense Reporting- Are You in Compliance?

Regardless of industry, every successful company incurs costs associated with attracting new clients, servicing existing clients, and maintaining professional designations outside of the office.  These costs often occur as “out-of-pocket” expenses to the employee.  In order to be reimbursed by the company that employee must complete an expense report.  In the event of an audit by the IRS, it is important that the employer have an accountable policy in place which includes acceptable documentation.

A few key points for documentation:

  •  Receipts are required for purchases $75 or greater unless it’s lodging which is always required

o   It is not a bad  policy  to take a conservative approach and require receipts for all transactions

  • Document dates, locations, people present, & business purpose of the charges. This is very important and often overlooked

o   Simply having the receipt is not enough

  • Itemize each charge

o   Do not combine charges by trip as they have different implications for general ledger and tax reporting

  • Be Timely

o   This allows your company to maintain accurate financials & also is more likely to ensure the accuracy of the expense report detail

One of the common challenges in maintaining proper records is that employees wait to complete expense reports and then often forget the details associated with the charges or lose receipts.  With the advancements in technology there is an easy solution to this – APPS!  There are numerous apps out there that allow you to take pictures of receipts, track mileage, & document details on the spot.  They are able to easily convert these details into a polished expense report.  So whether it is employing the use of an app or just updating your companies expense reporting guidelines; make sure you are getting the right information so you are prepared in the case of an IRS audit.

Author: Kyle Rogers, Accounting Supervisor

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