Gelco Audit Services put you in control

A revealing new study
There is no room for error—with intense IRS scrutiny and tough Sarbanes-Oxley (SOX) audits, companies must be certain their own internal financial controls are completely reliable and above reproach. To learn more about how companies are managing their audit processes to increase compliance, the Institute of Management and Administration (IOMA) conducted a major research survey into corporate Accounts Payable (AP) and Travel and Expense (T&E) policies and procedures ("Managing Accounts Payable," IOMA, April 2006). Their preliminary findings include some surprising statistics and several key best practices.

Results of IOMA Survey — Audits up more than 30% in the last 5 years
In response to the newly stringent enforcement of IRS regulations, businesses are now conducting more in-depth audits of expense reports than in the past, requiring high-level approvals, and penalizing employees for abuses or for not filing reports on time. As a result, 91% of companies surveyed report they are in compliance with SOX requirements. While the number of expense reports most companies audit has increased significantly--from 20% five years ago to 68% today — most do not review every report for 100% of expenses. Many companies audit based on a percentage of expenses, typically about 44%.

There are number of useful ways to target reports:

• Set a dollar threshold (reports that exceed the threshold are automatically audited)
• Reduce the threshold for checking receipts (the IRS reduced the threshold required for receipts to $75 from $25)
• Target specific sets of employees (employees with a record of unauthorized spending, new employees, etc.)
• Consider travel distances (reports that exceed the distance limits are automatically audited)
• Pinpoint specific categories of spending (air, car, hotel, etc.)
• Target internal policy categories (proper approvals, adequate documentation, and use of preferred vendors)

If audits reveal a substantial number of errors or problems, IOMA suggests increasing the percentage of reports audited.

• 87% of companies require approval of expense reports by a supervisor or department head
• 92% of companies do not limit the number of reports an employee may submit, but
• 21% penalize employees for late submission of reports
• 60% of companies maintain a policy for terminating employees for inappropriate use of a corporate credit card
• 74% of companies have immediate access to year-to-date spending information
• 48% of companies negotiate preferred rates for hotels; 44% negotiate preferred rates for car rentals; 32% negotiate preferred rates for airfare

Target your audits with Gelco’s Audit Service 

While, as IOMA advises, companies will want to select the number of expense reports to audit based on their needs, we see many clients choosing a 10% random audit and 100% audit for any special employee groups a company may wish to target. Target audits for risky populations are especially critical—some companies audit 100% of reports for senior executives and board members, for example.

Gelco's powerful audit selection engine allows businesses to specify the audit criteria for which match their T&E policies and spend. Audit criteria range from checking for missing approval signatures to specific spending categories and may include:

• Checking for receipts for all expenses over a client defined threshold
• Checking if receipt dates and amounts match reported dates and amounts
• Checking if entertainment descriptions are omitted
• Checking if extra receipts for amounts in excess of $75 are attached
• Checking if approval signatures are missing
• Checking for additional client-defined audit criteria if desired

Gelco Audit Services flag out-of-policy expenses, Gelco auditors complete the reviews and then send companies only the exceptions. It should come as no surprise that such audits are fast becoming a best practice — companies can stay in compliance with SOX regulations and find out if internal company policies and procedures are being followed at the same time.

Cost-effective control
The key to compliance is controlling spending, and the key to controlling spending is visibility. With ready access to year-to-date travel spend and accurate, pinpoint targeting tools, Gelco Audit Services gives companies the tools, the information, and the insight to maximize control — cost-effective control. Random sampling audits and targeted audits tailored to a company's needs save time and resources. Ultimately, the best practice for compliance also boosts efficiency and productivity.

Digital Imaging – a powerful control
Gelco’s Intelligent Imaging service adds an additional level of audit by verifying originality of all supporting documentation before imaging physical receipts which are then integrated into the online solution.  Gelco’s Fax Imaging service allows organizations to see supporting documentation online within minutes of submission which aides compliance during the approval process.  Gelco’s Audit Service can be utilized in conjunction with both imaging options.

If your company does not yet conduct audits (an article in the February 2006 issue of Business Travel News indicates that as many as 26% of companies do not conduct any audits at all), contact us to learn how Gelco Audit Services can help you control costs and stay in compliance.

If you manage the audit process internally today, contact us to learn how outsourcing the audit process to an unbiased, focused 3rd party can increase efficiency and allow you to only focus on the audit resolution process by implementing best practice policies and procedures.