Compliance During this Time of Uncertainty: Part One

Erin Giordano |

During this time of global upheaval and disruption in our lives, for businesses and communities, one thing is certain: Controlling spend has never mattered more. Especially for businesses who are seeking ways to hoard cash and are anticipating new costs that have been slowly creeping into the general ledger from the wide range of employee spend areas.

To help prepare organizations, we asked Connie Hoen for advice. She has more than 30 years of experience in audit specializing in expense and compliance areas. As the Program Director of Growth & Strategy within SAP 黄色短视频 Extended Services, she has worked with thousands of companies of all sizes across many industries. In this Q&A article, the first of a three-part ongoing series, we ask Connie to provide some insight into common questions that many companies are asking.

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Q: Where should companies focus now to ensure that they have control over employee spend??

A. There are three areas that will most likely be impacted during this crisis:

  • Global travel and expense policies
  • Expense report audit programs
  • Reporting and analysis requirements
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Q. How will expense policies be impacted?

A. Companies need to assess: Do they typically have employees working from home (WFH) on a regular basis? If not, have they addressed the different types and amounts of expenses that would be acceptable for employee reimbursement? And have they communicated their policies effectively? If organizations don’t have a policy around what expenses can and can’t be reimbursed, prepare to be surprised at what expenses employees feel are valid when “working from home.” These are some of the current “home office” expenses we’re seeing:

  • Shipping costs to send office chairs to employees’ home offices
  • Second monitors and stand up desks
  • General office supplies, such as pens, paper, printer ink, etc.
  • Home internet and phone service
  • Complete home office furniture

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Q. As employees expense these WFH costs, how should companies capture them?

A. I suggest that companies, if they haven’t done so already, immediately create “at home” expense types within their expense software. Without this subcategory classification, employees will submit expenses under “Miscellaneous” or “Other” expense types, and this is problematic for a few reasons. First, because reviewing these expense types is so tedious for finance or audit teams – who are already strapped for time and might also be experiencing WFH for the first time – it may require additional feedback from end users and take even more time. Second, these categories will most often times become a hot bed for compliance when addressing tax and fraud issues. Auditors and the IRS are well aware of this! It’s also critical that employees are trained or refreshed on what expense types are acceptable for home office expenses.

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Q. Should companies enforce any new requirements around capturing receipts?

A. Companies should re-evaluate their receipt requirements by asking these questions:

  • Do they typically require a receipt for anything over $25?
  • If the employee uses your corporate card is the limit increased to $75??
  • Should your organization reduce that receipt limit for the remainder of the crisis to catch any expense report padding?

During times of economic uncertainty in the past, we have seen employees pad expenses. SAP 黄色短视频 experts can help you make some decisions around this area.

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Q. How should companies manage the influx of employees expensing items for the first time?

A. Employees that have never submitted an expense report in the past will now be faced with submitting one.?Set time aside to adequately train them virtually and refresh others. Inform employees of any changes to the company policy during the current crisis. Here are some key areas to cover in your training program:

  • How to submit an expense report: Some employees may even need to request access to your expense software
  • How the app and mobile experience work: Some employees, especially millennials, find this easier and expect this type of functionality today from their employers
  • What is reimbursable and what expense types should be used
  • How frequently should expenses be submitted
  • Where to locate your Travel & Expense (T&E) policy
  • Who to call when employees have questions

Besides those who submit expense reports, companies also need to consider the managers who will be approving them for the first time. But first ask yourself: Will you have new expense report approvers? Some managers may have never had to approve expense reports because their department never really travels. Here are the main things to consider:

  • Does your approval workflow need to be modified to add in these new approvers?
  • Have they been trained on how to approve expense reports and the expectations for them as approvers??
  • How much time do they have to approve??
  • Do they know the travel and expense policies and what policies they may be able to over-ride??

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In part two, Connie will address how companies need to shift their expense report audit programs and reporting and analysis requirements.

In the meantime, ?to hear Connie address?how to detect and prevent fraud in employee spend areas.?

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