What I did –
I reviewed 10 employee expense reports to determine if corresponding receipts were attached and approvals had been provided, and I also assessed whether reported payments were eligible for reimbursement based on Schnitzer Steel Accounting Manual Section 300-10 (Expense Report Approval Procedure and Supporting Documentation Requirement) and 300-20(Expense Report Eligibility Requirement). After two exceptions were identified, I pulled 40 more employee expense reports based on Schnitzer Steel Internal Audit Manual – Chapter 2: Sampling Methodology to determine if the exceptions were isolated instances or systemic issues.
What I found –
Within the initial 10 expense reports, I found two exceptions. Specifically, Sample No.7 with a total amount over $1,000 did not have required evidence of second approval from a department head, and Sample No.9 was missing one receipt. Within the subsequent 40 expense reports, three additional exceptions were found. One exception (Sample No.11) was missing approval, and remaining two exceptions (Sample No.15 and No.45) were missing receipts, indicating the employee expense reporting process had systemic issues and was not in compliance with Schnitzer Steel Accounting Manual Section 300-10. No exceptions were found regarding reimbursement eligibility base on Accounting Manual Section 300-20.
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I also recommend that additional training of Schnitzer Steel Accounting Manual Section 300-10 be provided to AP department personnel who handle employee expense reports. I further recommend that the A/P department establish monitoring procedures to ensure the effectiveness of these internal control procedures and compliance with Schnitzer Steel Accounting Manual Section