If you are a supervisor and have supervisory responsibilities, it is crucial for you to understand the need and requirement to review your subordinates’ expenses and expense reports diligently. Your duty is to the Company – defined as a fiduciary responsibility. From a legal point of view, fiduciary responsibility is defined as:
“An individual in whom another has placed the utmost trust and confidence to manage and protect property or money. The relationship wherein one person has an obligation to act for another’s benefit.”
As a supervisor, you have been given a significant amount of trust by the Company; with this trust comes an equal amount of responsibility. This responsibility includes targeted due diligence for each expense you review. This review is completed on behalf of the Company to ensure that all expenses are true and correct and do not violate company policies or laws such as the Foreign Corrupt Practices Act (FCPA). The Company has entrusted you with ensuring all approved expenses meet several established criteria outlined in the Company’s Ethics Policy and your Employee Handbook. Generally, as a Supervisor (Approver), it is your responsibility to review expense reports for accuracy and ensure that the expense follows the established company policies. Approval of the expense report should only occur if the expense report meets the Company’s criteria for approval, but also, these expense reports should pass your internal ethical check.
Questions you should be raise during your review of expense reports include:
- Did the employee follow the Company Policies for this expense?
- If the employee traveled, did she have the Travel Authorization to travel?
- Was there a need to pre-approve any particular expense?
- Does the expense seem excessive or unclear?
- Was the expense for “Cash,” and are there sufficient receipts to account for the expended Cash?
- Are there receipts for each expense?
- Did the employee create the receipts? Does the receipt look real?
- Is there excessive alcohol, meals, or non-business related expenses?
As mentioned previously, when you approve an expense, you are affirming to the Company that you can personally defend the expense as “justifiable and correct,” based on your review of the expense, supporting documentation, and discussions with the employee. This, in essence, is your Fiduciary Responsibility. Failure as a manager to identify questionable expenses can lead to actions against you, up to and including termination for the failure to comply with your fiduciary responsibilities.
Should you have any questions on how to deal with or have identified questionable expenses, please reach out to the PAP Compliance Office at [email protected] or call 206.258.1297.