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As business travel continues to come back,?it is time to dust off our understanding of the rules around travel cost reimbursement by the government. We mentioned in a?previous blog?that FAR 31.205-46 will continue to govern this key audit area. Government contract expense management should be supported by a system that will guide your employees to follow your procedures. As an?SAP »ÆÉ«¶ÌÊÓƵ Partner?and with over 18 years of experience with government contractors,??has found a great balance between usability and compliance in the »ÆÉ«¶ÌÊÓƵ Expense solution.

From a compliance standpoint, a government contractor¡¯s procedures need to ensure advance planning takes place to meet the requirements for allowability. The first of these procedures is combining visits within the same geographical area into a single trip. Granted, there is what we could consider loophole language of ¡°wherever feasible and economically practical,¡± but this is a double-edged sword. Considering what is feasible and what is practical leaves room for interpretation by not just the contractor but also the auditor. Contractors (and their systems and procedures) must support not only the ability to combine trips, but the documentation for not combining trips. »ÆÉ«¶ÌÊÓƵ addresses this by?making it easy to travel to multiple locations and allow the system to track location specific information such as GSA per diem rates for meals and lodging. »ÆÉ«¶ÌÊÓƵ will easily track these for the traveler and apply them to the expense report with minimal input required from the user.

Next, to the maximum extent possible, a contractor must make use of the lowest customary standard, coach, or equivalent airfare accommodation available during normal business hours. There is a lot to unpack in this requirement alone. Lowest ¨C is the airfare the least expensive? Customary standard coach ¨C even if it?is the lowest, is the airfare in standard, coach class seating? Normal business hours ¨C even if the airfare is the least expensive and coach class, is it also for flights during normal business hours? This is an exercise in searching and documenting what the lowest coach class airfare during normal business hours would be and then finding other similar or lower ticket prices. »ÆÉ«¶ÌÊÓƵ solutions help address this by?partnering with and providing tight integration between the expense system and the travel management companies (TMCs). Partnering with a TMC allows the users to search for travel within »ÆÉ«¶ÌÊÓƵ. Rules can be established to promote company-specific requirements such as preferred vendors. Reports are provided to allow tracking of compliance and exceptions, giving management full visibility into who is travelling and where and when policies are being followed or abused.

Last, a contractor needs to coordinate travel in a way that minimizes the number of trips to the same location. Many times, this may translate to weekend travel time. If the cost of a flight home and back on Friday and Monday were more than the cost of the additional weekend stay, it could be more beneficial to the government to have a contractor stay through the weekend. This can be a tricky one, but again, documentation is key. When travelling to the same location on numerous occasions, especially in sequential days and weeks, it is important that your procedures dictate, and your system supports, the ability to provide a reason for why the extra stay was taken or not. In »ÆÉ«¶ÌÊÓƵ, the traveler can?easily determine the cost of lodging for comparison to airfare to make this justification.

All-in-all, the auditor is going to review individual trips to determine a few things:

1. Is the contractor complying with its travel policies and procedures (and does the system support them)?
2. Is the trip for an allowable purpose (direct or indirect cost to a contract)?
3. Are the travel costs documented and allowable per FAR?

SAP »ÆÉ«¶ÌÊÓƵ solutions support the process necessary to follow the rules and also the audit because they enforce company policies by ensuring the purpose of the travel is captured, clearly documents the travel costs, and automatically separates the unallowable costs into their own accounts.

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Brad Mitchell is Vice President of Professional Services ERP Systems at?