10.4 Managing Audit Rules, the Expense Audit and Reimbursement

The published objective is Manage Audit Rules. Auditing lets the company check compliance without reviewing every report. Rules choose the reports, and auditors work them in the Auditing work area.

Setting up expense auditing

Oracle's steps, the first four in any order:

1. Audit selection rules: which reports are audited.
2. Audit list rules: which employees go on the audit list.
3. Expense template and type rules: audits based on template, type and amounts.
4. Receipt and notification rules: receipts, overdue tracking and payment holds (section 9.5).
5. Assign the rules to business units on Manage Expense Report Audit and Receipt Rule Assignments.

You need at least one selection, audit list, or template and type rule assigned to a business unit, or Expenses can't audit its reports. With no audit selection rules, all reports are approved automatically.

Selection rules can carry audit types: codes printed on the report cover sheet, such as Paperless Audit. They help sort receipt packages into automatic approval, original receipts, imaged receipts and no-receipts-required audits.

Audit selection rules

Anomaly rules (preconfigured, editable)

• Top spenders in a period, for example the 10 top spenders of the past 6 months.
• Top policy violators in a period.
• The same policy violation more than N times in a period. The next report is audited.
• Public sector attendees.
• Duplicate expenses, on amount, date, currency, type and merchant.
• Same attendees on the same day.
• Amounts just below the missing receipt threshold.

The top-spender, top-violator and repeat-violation rules need the Generate Summary Metrics for Expenses process scheduled, so their statistics stay current.

The audit list and template rules

Audit list rules add employees automatically when they break:

• Maximum number of days to wait for original receipt package. Auditors must then record receipt package dates.
• Allowable total monthly amount of all reports.
• Allowable number of policy violations per month.
• Allowable number of reports per month.

Each rule has a Number of Days an Individual Remains on the Audit List. A new violation restarts the count. Other points:

• There is one audit list across all business units.
• You can add employees manually, with reasons such as amounts near threshold.
• Auditors can add or remove employees while auditing. Reasons come from the EXM_AUDIT_REASON lookup.
• Without an end date, membership lasts indefinitely.

Expense template and type rules select reports by template, or by template plus type with an amount, cumulative amount, currency and period. For example, Travel template, Entertainment over 250 USD in a month. A template-only rule audits every report on that template, such as all Training reports.

The risk indicator

Each audit reason has a predefined risk level. Examples:

• High: audit list member, inactive employee, duplicate expense item, policy violation, top spender.
• Medium: missing imaged receipt, keyword violation, public sector attendee.
• Low: aged items, amount over threshold, receipt required.
• Null: random selection.

Scores are Null 0, Low 10, Medium 40, High 120. The report's total gives:

• Low below 40;
• Medium from 40 to below 120;
• High at 120 or more.

To customize, create lookup types EXM_AUDIT_RISK_HIGH, EXM_AUDIT_RISK_MEDIUM and EXM_AUDIT_RISK_LOW and associate reason codes. Once you do, codes you leave out become Null.

The auditor's work

Access and assignment. Auditors get expense auditor data roles for their business units. They pick Unassigned Expense Reports or assign reports to their direct reports. Auditors can work in parallel with managers or after them (section 10.1).

Actions on Audit Expense Report:

Short pay. Select Short Pay with an Audit Issue on doubtful lines, then Complete Audit. The report splits: the approved lines go to payment, and the short-paid lines go back to the employee to fix or delete. Auditors can also adjust amounts, types and itemizations, and record original receipt package check-in, including by bar code.

Returning a report. An auditor can return a report in Ready for Payment Processing status for an active employee, before the invoice exists.

Reimbursement

After approval and audit, Process Expense Reimbursements creates Payables payment requests (sections 9.1 and 10.2). Holds are applied or released as part of the same run. If Pay Expense Reports Through is set to a third-party application:

1. The processes export XML to fin/expenses/export.
2. The external system pays employees and card issuers.
3. You load payment data into fin/expenses/import.
4. Update Expense Report Status marks the reports paid with the external references.