Enterprise Accounting Applications

Purpose of this workpaper:

1. To obtain transactions that incurred accommodations costs with same day travel. It is unusual to incur lodging costs for same day travel, and this is likely a sign of fictitious expenses claims.
2. To obtain transactions that incurred flight costs with same day travel. It is unusual to incur flight costs for same day travel, and this is likely a sign of fictitious expenses claims.
3. To obtain transactions where a same employee travels more than once with the same starting travel date. This is likely be a sign of fictitious expenses claim as it is impossible for an employee to be travelling to two different destinations at a same time.
4. To obtain transactions where a same employee submits identical accommodation costs for several receipts. This may be a sign of overstated expenses as the employee has a go to amount for most of the receipts he submits.
5. To obtain transactions where employees may have inflated accommodation, meals and incidentals. This may be a sign of overstated expenses as the employee overstates most of the amount he has incurred.

Analysis

1. Same Day Travel with Accommodation Costs

In total, there were 124 records that incurred accommodation costs for same day travel. The records were derived by extracting records where the date gap is 0 but with accommodation costs of more than $0. The average accommodation costs for same day travel was $162.86.

Theoretically, there should not be any records for same day travel with accommodation expenditure. However, there are some possibilities which could have potentially lead to such records:

1. The employee departs and arrives at the location in the middle of the night. He/she rents a room to rest till the morning. He/she attends the event and departs.
2. The employee is claiming for a past expenditure.
3. The employee has paid for his superior’s stay, in which he did not stay.
4. The employee has entered the wrong start/end date.

These are some examples of the above possibilities:

The employee pays for a minister’s stay:

[pic 1]

The employee requires overnight accommodation:

[pic 2]

The employee paid accommodation for his/her staff member:

[pic 3]

The employee paid accommodation for his/her superior:

[pic 4]

Records of Suspicious Nature

There was a particular record with $17.06 of accommodation expenses which looks rather suspicious as the average cost of accommodation should be approximately $100-200 per night.

[pic 5]

Another particular transaction that seemed a little out of place was this, where a Staff to Minister incurred accommodation costs even though his purpose was to drive the Minister to North Bay.

[pic 6]

When we probe further into these records, we can see that many there were many transactions that did not provide any reasons for incurring accommodation expenses. Some examples are:

[pic 7]

[pic 8][pic 9][pic 10]

Implications and Possible Solution

The internal auditor should question the employees who submitted claims for accommodation for same day travel with no proper explanation as it may be a case of fictitious expense claims. In order to prevent such incidents from happening in the future, employees who submit accommodation claims for same day travel should be subjected to scrutiny and approval before the expenses are reimbursed.

1. Same Day Travel with Flight Costs

A total of 311 transactions were found to have filed for flight costs reimbursement even though it was a same day travel. The records were derived by extracting records where the date gap is 0 but with flight costs of more than $0. The average flight costs for same day travel was $682.80.

Theoretically, there should not be any records for same day travel with flight expenditure. However, there are some possibilities which could have potentially lead to such records:

1. Wrong classification of flight costs
2. Employee incurs a same day domestic flight
3. Employee purchases flight credits for future flights
4. Employee is claiming for past expenditure

These are some examples of the above possibilities:

Wrong classification of flight costs:

[pic 11]

Since Canada is a large country, there may be same day domestic flights, such as:

[pic 12]

[pic 13]

And where the employee purchases flight credits:

[pic 14]

Purchasing of flight pass credits for future flights are reasonable, but proper documentation (i.e. invoice and receipts) should be provided.

Where the employee is claiming for past expenditure (underclaimed)

[pic 15]

Records of Suspicious Nature

In a particular record, an employee claims air fare of $15.45 for a flight to New York. This looks to be rather suspicious as it is unlikely that a travel ticket can be that cheap, unless there was a discount.

[pic 16]

Certain records in which the flight is of the same destination but the difference in price is drastic, such as:

[pic 17]

[pic 18]

There may be several reasons the above could occur, such as a high demand in flight tickets or the employee taking a different travel class.

Implications and Possible Solution

The internal auditor should question the employees who submitted claims for flight costs for same day travel with no proper explanation as it may be a case of fictitious expense claims. In order to prevent such incidents from happening in the future, employees who submit flight claims for same day travel should be subjected to scrutiny and approval before the expenses are reimbursed.