Accounts Payable Articles

Accounts Payable Now & Tomorrow is a monthly publication with the most current advice from the trenches based on our reader surveys, interviews with the best practitioners, and the latest changes in all related specialty areas such as T&E, 1099s, sales and use tax, OFAC, VAT, electronic payment alternatives etc. Here is a sample article.

Why Some Companies
Are Starting to Require Meal Receipts

Processing and auditing travel and entertainment expense reimburse requests is tedious enough without adding another step. But that is exactly what some organizations are starting to do. They are requiring the meal receipt that shows exactly what was ordered. While a few companies have been doing this for years, most haven’t. What follows is a short list of the reasons why these receipts are sometimes requested and then a discussion on the best way to handle this additional influx of paper (or hopefully images to be audited).

The Rationale

If you are scratching your head wondering why receipts are being requested, consider the following.

If your organization has grants that prohibit the use of the funds to pay for alcohol, you might want require this additional documentation. Additionally, a few companies do not reimburse for liquor for individual meals so they might also wish to monitor. By the way, this is not to say that your employees cannot have a drink with their meals. They simply must pay for it themselves. This means either requesting a separate bill or deducting the amount from the reimbursement. In an era when organizations need to keep costs under control, making sure that spending outside the approved policy does not occur is one way to rein in expenses.
A few other organizations check these meal receipts to figure out how many people attended the event. While this might seem intrusive to some, there is actually some logic behind this, especially if you suspect that some employees are routinely adding people to an event who having nothing to do with the business. And, that is to make sure you are in compliance with all IRS regulations related to your accountable plan status. As you may recall, one of the requirements for reporting expenses to the IRS is that the name and business relationship be listed for every attendee at an event (including meals the company pays for).
Then there is the latest scam being used by a very few employees to bilk their organization for money they are not entitled to. Here’s how it goes. An employee takes someone out to a business lunch. They fully report the event, meeting IRS documentation requirements. However, before they pay the bill at the restaurant, they have the restaurant include a gift card intended for personal use – not as a gift to a vendor or customer. It is unlikely this can be determined from the receipt – unless the itemized receipt is requested. Requiring the itemized receipt will serve as a deterrent. Hopefully none of your employees would be foolish enough to commit this fraud and then turn in the receipt showing the gift card. So, if you move to this requirement, do not expect to see gift cards showing up on the receipts.

Monitoring These Receipts

Now if you are thinking “uggh, more tedious work for the department” fear not. While you might require these receipts and the organization’s employees might believe they are all being checked, you should not devote too much time to that task. If your policy makes managers responsible for the T&E expense reimbursement reports they approve and really does hold them accountable if they don’t, you will not have much additional work. Spot check these receipts. This means looking at maybe five to ten percent of these receipts and perhaps looking at the receipts of those employees known to take liberty with their entertainment budgets.The IRS is currently conducting a number of audits with the states purpose of gathering data.

Expense reimbursements are one of the three areas under scrutiny. We can only guess that they are doing this because they think there is potential additional tax revenue for the government in this area. And, there is a good reason to believe that they think some employees and/or organizations are playing games that are potentially contributing to the tax gap. Whatever the true reason, the audits should serve as a warning to those not fully documenting their expense reimbursements correctly that the days of lax attention to T&E are fast coming to an end. If we are not monitoring everything we should, we need to get started.

In case it is not clear, let me state that at least at this point, getting meal receipts is not an IRS requirement. That does not mean that you should not do so, if you suspect you have any of the issues discussed above.

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