Company travel and entertainment (T&E) policies are becoming increasingly flexible. While we highly recommend offering some leeway in your expense policy, there are likely certain policy enforcements that are important to be aware of, such as travel upgrades, alcohol purchases, or unauthorized merchants.
Expense Audit incorporates your company policy and flags noncompliant spend so your auditors can focus solely on high-risk items. Using NLP (natural language processing) and data augmentation, artificial intelligence (AI) finds key phrases associated with out-of-policy items not specifically written in your policy that would otherwise go undetected.
What does that look like? Below are a few examples of unauthorized spend our Expense Audit solution can find.
For companies that either don’t allow alcohol, or just want to track alcohol purchased on the company dime, AI identifies common terms or brand names within itemized receipts, such as “shots,” “Grey Goose,” or “Johnnie Walker Blue” and flags them for auditor review. Using natural language processing, AI understands if something is an out-of-policy “Old Fashioned cocktail” or a within-policy “shrimp cocktail.”
Another commonly unauthorized purchase we see is tobacco products. AI knows which receipt terms are associated with tobacco, including “cigarettes,” “cigars,” “chewing tobacco,” and brand names such as “Marlboro.” Although these items may not be explicitly listed as out-of-policy, AI will flag it for further review. Using contextual clues, AI can determine if “Marlboro” is referring to a cigarette purchase, or a location such as “Marlboro St.”
Although gifts aren’t necessarily unauthorized purchases, they’re important to monitor for compliance with the Foreign Corrupt Practices Act (FCPA), Sunshine Act, and UK Anti-Bribery laws. Under these regulations, gifts given to foreign government officials or health care professionals are considered bribes. AI will verify if a gift recipient is a diplomat, healthcare professional, or other politically-exposed person or entity.
Another reason companies track gifts is to stay in line with IRS regulations. According to the IRS, no more than $25 of business gifts to a particular client can be written off during a tax year. Companies will typically set an allotted amount between $50 – $100 per year of gift spend and flag any unauthorized spend outside of this range.
From hotel upgrades, first class flight upgrades, to selecting Uber Black instead of a standard car, AI will flag any upgrades that aren’t allowable in your policy. Some of the more highly visible unauthorized items that AI can flag are add ons for car rentals such as “Personal Accident and Effects” or “Personal Accident Insurance.” Many companies don’t allow these expenses because they’re already covered under a different insurance plan and additional coverage is unnecessary. Another common non-reimbursable expense associated with car rentals is “fuel service,” which means the gas tank wasn’t full when the car was returned to the merchant, resulting in an out-of-policy fuel service charge.
Using online sources, including Google and Yelp, our AI will determine the true nature of a merchant name and flag things such as strip clubs, spas or even casinos. In most cases things such as strip clubs will actually have a parent company name and most people, auditors or not would not know what these parent company names are. For example, one common merchant names we flag is “K-Kel, Inc.,” which is the parent company for the strip club Spearmint Rhino.
What about exceptions?
Sometimes exceptions need to be made, and many companies allow the above purchases in certain circumstances. Maybe there’s a celebratory dinner where alcohol was served, or a last-minute trip that required a business class flight. Over time, AI tracks which employees or teams have higher spend in particular categories and assigns a behavior score. Employees and teams with higher scores are brought your attention in case the behavior needs to be addressed. Overall, AI is also flexible based on your needs.
In many cases, an auditor may already be finding these items. However, AppZen ensures that your auditors focus their attention on the most important items, freeing up time to focus on more important tasks. Although AppZen isn’t the judge or the jury, we bring these items to your attention in case they need to be addressed.
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