Nonprofit Employee Expense Reimbursement Plans Part 3
Nonprofit Employee Expense Reimbursement Plans: Best Practices
As we continue our best practice discussion, the proper setup, can pay dividends during your annual audit process. From my experience, implementing the following elements into your nonprofit’s accountable expense reimbursement plans generally results in a smoother audit process. Read Part 1 and Part 2, if you need to catch up.
1. Employee Expense Reimbursement Form
This form should capture the following:
• Organizational Name, Address, and Logo in upper left or right corner
• Title “Employee Expense Reimbursement Form”
• Columns for Date, Account, Class, Location, Fund, Description, People Present, Amount, Receipts
• Rows (10 to 20 rows to list multiple transactions)
• Total Amount box listing amount to be reimbursed to employee
• A few blank lines for special notes or remarks for supervisor and/or accounting
• Lines for employee signature, 1st approval signature, and 2nd approval signature (if needed)
Although the IRS does not require receipts for individual expenses less than $75 (except for lodging where receipts are needed for any amount), it is beneficial for audits and internal controls if receipts can be obtained for all individual expenses.
• Original Receipts - Submitted with expense reimbursement forms.
Actual receipts showing company name, date, amount, description of goods/services purchased, and business use. These receipts should match to the amounts listed on the Expense Reimbursement Form
• Created Receipts - When original receipts cannot be obtained from a store or service provider.
Use a form similar to the expense reimbursement form to list expenses for which a receipt was not received or lost. This form should be reviewed , signed, and dated just like an Expense Reimbursement Form.
Decide if organization will set a cap on what can be reimbursed without a receipt (i.e. some non-profits will only reimburse an employee up to $50 or $75 for an individual expenses that does not have a receipt. Some exceptions may apply for foreign travel, where receipts are harder to obtain.
In general, the more information and receipts that can be obtained, the better for internal and external audits. The challenge is to create expense reimbursement forms that gather enough info without being overly burdensome to the employee.
Note: Your Jitasa account manager / primary accounting associate is an excellent resource to help create or review your nonprofit’s accountable reimbursement plan and/or to help create a tailored expense reimbursement form.
Please join us on Tuesday, May 21st as we wrap up our series with a discussion on the importance of senior management buy in as you execute your accountable expense reimbursement policy.
James Strombeck, Director of Delivery Support Team, Jitasa