We once sat in an interview with a manager who shared his process for approving his team’s expense reports. Team members placed their completed expense reports in his desk drawer throughout the month. He was tired of signing each and every expense report by hand, so on the last weekday of the month, he took out the stack of expenses and geared up an ink pad and rubber stamp with his name on it. He spent no more than 15 seconds reviewing and approving each expense report. Then, he walked the reports to the Accounting Manager for reimbursement.

If this sounds familiar, we can understand the need to have manager approval from a compliance aspect, but blind manager sign-offs like these are a real risk. Here are the pros and cons of keeping the age old process of manager approval for T&E expenses, and how artificial intelligence (AI) can provide a better solution.

Pro: Manager approvals should be mandatory

  1. First set of eyes, sometimes second. In companies that review only a sample of expense reports, often times the manager is the only set of eyes on an expense report. In companies where all expense reports are reviewed by Accounting, Finance, or Compliance departments, managers provide a second set of eyes for policy compliance and fraud detection.
  2. Business reason awareness. Managers are aware of the business justification for the expense. They should know what they’re approving. Accounting, Finance, or Compliance departments are only looking for expense compliance with internal policies.
  3. Budget visibility. The employee expense may fall within the manager’s allotted budget, and thus the manager should be part of the approvals process for their own awareness.

Cons: Manager approvals are a waste of time 

  1. Limited time. Managers don’t always have the bandwidth to thoroughly review expense documentation and may sign off purely as a compliance requirement. They usually approve at a high level (not looking at receipts, not checking for duplicates with prior reports, etc.), at month end, and usually alongside multiple other last-minute approval requests. Having highly paid managers spending time verifying receipts is probably not the most effective use of company resources.
  2. Lack of training. Managers are inadequately trained to identify policy violations and red flags. Even with training from the Accounting, Finance, or Compliance departments, fraud detection isn’t most managers’ area of expertise.
  3. Employee trust. Manager approval is often swayed by their trust in the employee submitting the report. Who would question the expenses of their team’s best employee?
  4. Collusion opportunity. With over 50% of fraud cases involving multiple perpetrators, an employee submitting fraudulent expense reports could easily be working with the approving manager. Collusion circumvents anti-fraud controls like separation of duties and independent checks.

How to solve the manager approval process 

There are several factors to consider beyond just the pros and cons mentioned above. The best solution takes into account company culture, business, size and expense reimbursements process.

Managers can remove themselves as the bottleneck in the expense reimbursement process. Consider using an AI tool like AppZen Expense Audit to reduce or even eliminate manager approvals. Its agentic AI enables improved expense policy compliance, with the ability to catch fraud that even a manager may overlook with the millions of other things on their mind.