Audit question on expense documentation: what does "original" mean?

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Audit question on expense documentation: what does "original" mean?

Postby daveywest » Sun Mar 11, 2012 3:42 pm

Ward audit question 17 (Stake question 18) asks about proper documentation for expenses.

Some of the auditors in our stake have interperted the requirement "Every payment and advance should have original receipts or invoices" to mean that copies, printouts from online orders, or faxed copies of reciepts are not acceptable.

For example, we share expenses for a stake youth camp with a neighbor stake. They sent us a photocopy of an invoice, and asked us to pay 1/2 of the bill. Because we did not have the "original" invoice in our files, the auditor marked this as an exception.

I had always interperted this rule to refer to lost documentation. Because this new application of the word "original" caught me off guard, I'm curious how others interpert this audit question?
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Postby aebrown » Sun Mar 11, 2012 4:54 pm

There are clearly cases where your auditor's definition of "original" is unreasonable. If you order something online, your only receipt may well come from a web page or email. In those cases, the auditor needs to apply some common sense and allow those documents. In other cases, the audit clearly asks for original receipts or invoices, but it is also clear that in exceptional cases, it is acceptable to have "substitute documentation [that includes] a written explanation with the payment purpose, a description of what was bought or paid for, the date the payment was made, the name of the person assisted (for payments from fast offerings), and proper approval." Only "if several transactions are documented this way" does it become an exception.

Particularly for expenses shared between units, it is unreasonable to require original receipts -- the other unit should supply an original invoice that they draw up, which may be accompanied by copies of the invoices or receipts that justified the expenses. There's only one original receipt, and it makes no sense to require every unit that shares in the expense to have that one original receipt. The original invoice generated by the other unit satisfies the requirement.

If you have concerns (and I think you have valid concerns about an overly narrow interpretation), I would suggest that you discuss this issue with your stake's audit committee. Ultimately they (under the direction of the stake president) decide how the auditors should be handling such questions for your stake.
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Postby wrigjef » Sun Mar 11, 2012 5:32 pm

We had this issue come up a year ago. The audit committee had me draft the note below. Wording of the policy quote may have changed since then.

Dear Brethren,
The most recent round of financial audits performed within the Centerville Stake revealed some opportunities for improvement including one involving clarification of policy. Church policy states
“Every expenditure, including any advance given for any purpose, should have original receipts, invoices, or similar notices of amounts due or already paid.”
“If an original receipt or invoice is lost, the substitute documentation should include a written explanation of the payment purpose, a statement or description of the goods or services acquired, the period the payment applies to, the name of the person who was assisted (for fast-offering payments), corroborating signatures (such as signatures of payees and beneficiaries), and so on.
“Original receipts” are mentioned but it also says “or similar notices of amounts due or already paid.”
Whenever possible the receipts should be original, however, a copy is acceptable and should not trigger an automatic audit exception. Some further direction from experienced auditors around the church indicates that if copies are indeed used on a regular basis (i.e. the auditor tests the required number of expense samples and finds photocopied receipts in many of them), an audit exception could, at the discretion of the auditor, be written but primarily to prompt the Bishop and Clerk to investigate why copies are used regularly.
The Centreville Stake will not make new rules for audit exceptions but it is our desire that on those very rare occasions when the original receipt is not available and a copy is used, that the member/requestor sign the copy indicating that it is a legitimate receipt for the expense being submitted along with a few words explaining why a copy is being provided (i.e. original lost, or original held by the member).

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