Most businesses will reimburse an employee’s business-related expenses. Some require employees to submit an expense report immediately after a business trip or taking a client out for a meal. Others schedule a day of the week in which expense reports are reviewed and paid. This encourages employees to submit reports in time for that weekly review in order to get a check as quickly as possible.

One advantage to the accounting department of setting aside one day a week to handle expense reports is that it allows them to manage the work flow and plan for what can be a time-consuming process to review and pay those expenses. Usually an employee must submit an expense report that lists business expenses and show receipts for each expense. A supervisor or manager must approve the expense report before submitting it to Accounting for reimbursement.

Trips, meals, and entertainment are not the only items that could appear on the report. Sometimes an office runs short of critical supplies and one of the employees must volunteer to run out to get them in an emergency. Frequently this employee charges the purchase to a personal credit card and then submits an expense report for reimbursement.

Reimbursement for the use of a personal car for business purposes is another common item on an employee expense account. Salespeople regularly submit expense reports for promotion materials they had copied while on the road.

Once the employee gets management approval for his expense reports from his manager, they are sent to Accounting. After the accounting clerk who is processing expense accounts finishes reviewing the reports, he would then need to post the entries in the cash disbursements journal and the affected expense accounts. In addition to those postings, the clerk would also add the details to the individual employee’s records.

The posting to the cash disbursements journal could be a summary of all the employee expense reports processed, but the clerk should attach his work papers so the details are available if a question arises later. The expense report and copies of the receipts submitted by each employee should be kept in the employee’s file.

Here is a sample of how to post employee expenses.

The closing process is an excellent time to confirm that the numbers in your expense accounts match the totals recorded in your employees’ individual ledgers. This is also a good time to review expenses and be certain there doesn’t appear to be abuse. Your best bet is to prepare a spreadsheet with one line per employee and columns of the common expenses for the business. Here’s what that spreadsheet could look like.

Quickly glancing at this spreadsheet, you can see that Jack’s expenses are considerably higher than Jane’s or Jill’s, even though they are all in the same department with the same job. Their manager may not have noticed this difference when signing the weekly expense reports, because they didn’t seem that out of line at the end of each week.

Accounting should give the manager a summary of the expenses submitted by each employee at the end of the month, so she can review them and possibly question an employee whose numbers are much higher. There may be nothing wrong. Let’s assume these are expense reports for outside salespeople and Jack just happened to have a great month with a lot more appointments than Jane or Jill. If that were not the case and Jack’s sales activity was no better than Jane’s or Jill’s, the manager may need to look more closely at Jack’s expenses and discuss getting them in line with others in the same job.

You can see that closing accounts and verifying the numbers is not the only purpose of the month-end close process. Looking at the month in summary really helps you to pick out problems, whether they involve an employee who is submitting higher-than-normal expense reports or a customer who is not paying their bill on time.