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segunda-feira, 15 de abril de 2013

BTN Blueprint: Top 10 Tips For Auditing Travel Card Transactions


Note: The National Association of Purchasing Card Professionals in early 2013 conducted a panel discussion on travel auditing with Silver Spring Networks program manager Virginia Pope and FIS credit card manager Toni Waters. That discussion generated the tips below.  

Diane McGuire
Are you tasked with managing travel card or corporate card transactions? Even if your policies and procedures manual is exhaustive, it's not always easy to manage travelers who know how to work the system, the cash and the receipts. Our panelists said, "We're on to you." The following top 10 list offers solid practices for auditing travel card transactions.
1. Managers and approvers are a key control; get them to pay attention. Your first line of defense is the manager who approves a traveler's expense report, ensuring that all transactions have a clear and justifiable business purpose. Help those managers understand that rubber-stamping expense reports without looking at the details tempts employees and opens the organization up to fraud.
2. Look for spend on weekends and around holidays. We all know that Sunday is a big travel day for businesspeople who need to travel cross-country for a Monday meeting. Maybe that's why our mavericks try to slip in personal charges on weekends and the days surrounding holidays. Our panelists also watch the day before Thanksgiving and the day after—Black Friday—for misuse.
3. Track and graph the biggest spenders. Our panelists recommend sorting data on your biggest spenders, graphing expenses over time, looking for spikes in spend. Was it a one-time jump? Use your data reporting tools to review month-over-month patterns and make sure the spikes make sense.
4. Review merchant name, including your card issuer. Our panelists put on their detective hats every day, looking for suspicious merchants: upscale clothing stores, online retailers and consumer electronics. Justification is key. Approving managers should review the merchant name and make sure the item or service aligns with the merchant. Most organizations have no annual fees associated with their programs, so you should never see the issuer as the merchant.
5. Sort expenses by merchant category code. When looking for exceptions, sort by MCC, taking a look at codes outside hotels and restaurants (the largest categories). You can quickly look through retail and other categories for merchants that are unlikely to be legit. Although experienced managers know to look at the funny ones—they will jump out at you—they also remind us that there are a lot of gray areas too: Target? Wal-Mart? Clothing retailers? Keep in mind that you can get meals at these places. And clothing could be legitimate if someone loses their luggage.
6. Require flight receipts. Some travelers wonder why this is mandatory, especially when booking through a company-sanctioned travel management company. However, receipts often are required to ensure the flight is not in someone else's name—a spouse, for instance. There could be instances when an employee is going on a business trip and he or she charges a spouse's ticket to a company card. It's also important to track flights for contractors, clients and individuals flying in for job interviews, for example.
7. Keep an eye on your cash. Requesting cash reimbursement without a receipt presents a huge opportunity for falsifying expenses, especially as IRS guidance stipulates, "Documentary evidence is not needed if your expense, other than lodging, is less than $75." Our panelists report that cash expenses are inching up and often are very close to this dollar amount. Pull a cash report and look solely at those transactions; it's likely that most should be on the card. Our panelists also recommend:
• Organizations should feel free to set their own thresholds for cash and receipt requirements. A lower threshold for cash is probably a better idea; try $10 or $25. While this can be a pain point for many employees, it makes sense from a risk-management perspective. A $10 cash threshold makes a cash meal more in line with reality.
• Encourage cardholders to provide all receipts regardless of policy.
• Most transactions should be placed on a card for process cost savings, spend transparency and the opportunity to earn incentives. Remind cardholders about recommended card use and help them fall in line.
8. Look for oddities and duplicate payments using the Same-Same-Same" test. P-card auditors will be familiar with the Same-Same-Same concept, developed by Dr. Mark Nigrini in his book Forensic Analytics: Methods and Techniques for Forensic Accounting Investigations, as they for years have been looking for duplicate or split transactions that fall just under card transaction limits. In addition to duplicate payments, we're essentially looking for odd transactions that happen too often. By extracting transactions that fall just a hair under the limit for which an organization requires a receipt, as well as those that end in .99, .00 or .50 (which are uncommon with typical transactions that include tax), it is possible to find unusual patterns of activity.
9. Watch for a heavy hand with cash tipping. This category goes hand-in-hand with cash reimbursement policy as a red flag. This is where T&E policy can really make an impact. Many organizational travel policies include a guideline stating "the organization won't reimburse more than X percent for [type of] tip." Our panelists also recommend running a report on average tips per employee to notice unusual amounts.
10. Look for padding in automobile mileage expense reports. It's easy for a traveler to throw a few extra miles on a mileage expense report, so it's a good idea to include detailed travel logs as part of your travel policy: "Where did you go? What was the purpose?" When it comes to auto travel, recommend that individuals choose the most cost-effective option for the organization. For example, if a vehicle needs to be driven more than 300 miles, a rental car is usually the cheaper option. But if you work in a rural area and have to drive 50 miles to a rental car location, maybe not.
Stay On Top Of Your Game (And Theirs) 
Stay on top of new technology, automation tools, surveys and benchmarks that demonstrate what others are doing well. Take time to understand different types of liability and what makes sense for your organization. Our panelists have experience with individual, corporate and joint-and-several liability. With individual liability, the cardholder has some skin in the game; otherwise, there isn't as much motivation to create expense reports. If cardholders don't pay a bill, it affects their personal credit and, if a delinquency exceeds 180 days, the status could impact a potential rebate. In most cases, the organization pays a delinquent bill, and then demands payment from the cardholder. Organizations should watch these accounts very carefully.
Handling Repeat Offenders 
Corporate culture can play a role in the level of discipline that's meted out for misuse. In the name of keeping employees happy, some organizations employ stricter measures, like card cancellation, only as a last resort. Try these steps with your cardholders:
1. Take action immediately if you conclude that fraud has occurred. Follow through on your organization's policy concerning consequences for dealing with fraud.
2. If applicable, remind cardholders that this is not a personal card and it can be taken away.
3. Make them acknowledge policy: Inappropriate expenses are never allowed on the card and could be grounds for cancellation, without notice.
4. Store reprimands in a human resources file—the first warning, the second warning—so you have a record of steps taken.
This report originally appeared in the April 1, 2013, edition of Business Travel News. 

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