A 2014 study by the Association of Certified Fraud Examiners estimates that organizations lose an average of 5% revenue to fraud each year. Without strong internal controls, a company is at risk for theft, misappropriation of funds, and a major audit. Here’s how to use Tallie’s automated expense reports to prevent fraud and stay IRS compliant year-round.
Create (and automatically enforce) thorough company policies.
You cannot prevent expense fraud without first establishing clear, specific company policies. For example, you may permit employees to expense WiFi fees at a conference, but only up to $20 a day. Of course, even the most thorough policy is useless unless it’s properly enforced. Miscommunication, a lack of awareness, and ineffective management can expose a company to fraud and a potential audit.
Historically, the reinforcement of these policies has been tedious and time-consuming. Accountants had to manually respond to violations, re-educate employees about the company policy, and then wait for a corrected expense report. Now, modern expense report software eliminates the need for these manual processes.
Companies that automate internal controls not only save time and cost, but also decrease the likelihood of fraud. Tallie’s policy engine lets you create custom expense policies based on category, dollar amount, project, class and more. Any expense that violates these policies is automatically detected, and the employee is notified immediately.
If an employee doesn’t understand why their expense was in violation, they can simply click the “Out of Policy” alert to learn more. This not only prevents unnecessary errors, but helps ensure that employees remember the company policy while making future purchases.
Keep expense reports IRS-compliant with timely and accurate records.
IRS Publication 463 requires that your records be not only accurate, but timely:
“You should record the elements of an expense or of a business use at or near the time of the expense or use and support it with sufficient documentary evidence.”
(Publication 463, Cat. No. 11081L, Page 26)
Submitting your expense reports with Tallie satisfies both of these requirements. In the event of an audit, the IRS will expect you to provide consistent and complete records of all purchases and reimbursements, complete with legible receipts. To ensure you’re recording “sufficient documentary evidence,” we recommend using Tallie’s policy engine to require a receipt for any expense over $75, as per IRS document 463, chapter 5.
One of the major benefits of expense report software like Tallie is the ability to throw away your receipts after you’ve captured their image. But will the IRS really accept a picture of a receipt in lieu of the original?
Believe it or not, the IRS has actually accepted electronic documents, including scanned receipts, since 1997 (IRS Revenue Procedure 97-22). In order to be considered valid, the receipt (or receipt image) must include the merchant’s name and address, the transaction date, the amount paid, and the business reason for your purchase. All of this information can be stored within Tallie for easy access in the event of an audit. No more hunting through shoeboxes!
Tallie also allows you to store your receipts within your chosen accounting system. Exports to QuickBooks Online and Intacct include your receipt images as part of an attachment to the Bill (Intacct) or Bill/Check/Expense (QuickBooks Online.)
QuickBooks Desktop users can take advantage of our direct integration with SmartVault, where their electronic documents can be stored and retrieved on demand.
Tallie is the best expense management solution for strengthening your business’s internal controls. You create your custom policies within Tallie–we’ll automatically enforce them. Want to see how? Schedule a free, 1-on-1 product demo with one of our experts.