How to read an expense report

Expense reports are a common part of business finance, particularly in areas such as sales or any time someone in the company travels. Expense reports are those expenses that employees make and are reimbursed for, or record to show their boss what they have spent company money on for business-related purposes. The most common business write-offs include taxi fare, business lunches or meetings, hotels, travel expenses, and any other expenses incurred for job purposes.

One of the responsibilities of a manager is to read and approve the expense reports of his or her employees. This helps to make sure employees aren't going over allotted amounts for certain things such as food or travel (if companies have limits in place), get an idea of where money is being spent, and to spot any erroneous or unauthorized purchases made with company money.

The following is an idea of how to read a typical expense report as well as what to be on the lookout for.

Quickly look over the report.
Scan the expense report to make sure the employee has filled out all required spaces. Most company policies require signatures and specific forms. Many companies also use online forms, so make sure the employee has filled out the right form and all the spaces. If not, return it to be filled in correctly.

You will also want to make sure the employee has filled in completely his or her name, department or department number, and employee ID number, if your company has one. Many companies use ID numbers to automate the process.

Look over the report in detail.
Once you know all forms have been filled in correctly and there is no missing information, you can then begin going over the report line-by-line in detail. Make sure all information is filled out regarding the date, category, description of purchase, and the amount spent. If your company reimburses employees, look to see how the purchase was made and compare it with receipts turned in.

Make sure you are also taking into account company policy regarding limits. Add up the amounts spent that month on various categories, including food, travel, and so forth, to make sure they are in accordance with company policy.
Compare receipts
You will then want to compare the receipts turned in with the information filled out on the expense report form. Make sure all receipts are in place. If any are missing, contact the employee for the missing receipts, attaching them to the report. From there, you can forward it to the next approving manager or send it to accounting for reimbursement.

If you find what you think are suspicious charges, discuss them with the employee. It could very well be an oversight on their report.

If you are concerned with expense report padding, however, you may consider using special expense report software designed to watch out for suspicious activity on expense reports, including patterns in where an employee eats or receipts for the same amount; some common scams include getting multiple receipts and then turning them in once a month, hoping the employer doesn't notice. It also helps to be aware of some of the more common expense report frauds, many of which include travel and airline tickets.

Reading and approving expense reports are an important part of a manager's job in order to keep track of the finances of the company.