How to automate expense audits

You have expense policies in place, but how closely are you keeping an eye on what your team is actually spending? If you’re not sure, it’s probably time to audit your expenses.

Conducting an expense audit helps you analyze the actual amount you’re spending on different types of expenses and assess whether the spending is in line with company policies. If done manually, this can be a tedious and time-consuming process, but it doesn’t have to be thanks to automation tools.

In this article, we explain what an expense audit is, the steps to conduct one, challenges you might face, and how to automate the process.

What is an expense audit?

An expense audit is a review and analysis of your company's expenses to see if they are in line with your expense policies. Best case scenario: you find all expenses are justified and nothing changes. However, sometimes through expense audits, you discover inefficiencies and redundancies that can be cut back to increase your profit margin.

An expense audit is part of a system of checks and balances that should be built into any company accounting system. You should think about building one into your regular cycle, sometimes monthly, but at least once every three to six months. It’s not meant to be a full financial audit, where debits and credits are analyzed for corporate reporting, but they do include an audit of expense reimbursements.

How do you audit expenses?

The expense audit process is relatively simple. You review expense reports, match receipts, and identify discrepancies. You’re checking for accuracy, proper categorization, and complete documentation.

Let’s go into the audit procedures in more detail:

1. Identify and track expenses

The primary goal of an expense audit is to identify and track business expenses. Your first step is to review the existing expense reports. If you’re using an automated system, it simplifies the process. However, if they use a manual system, you will review reports from various sources.

Here are a few things to keep in mind for your expense report audit:

• The report is dated and listed in the correct period
• Employee expenses are accurate and matche receipts/invoices
• Submissions include all necessary documentation
• Everything is correctly categorized
• All expenses are business-related
• Vendors are verified

2. Ensure expenses are aligned with company policies

Next, check your findings against your expense policies and procedures. Ask yourself: are the expenses listed inline with your policies, and were they justified?If your policy has been created well, you will know very clearly what is allowed or not and if you have a specific approved vendor list. As you review the expenses, you also find that your policy is outdated and needs updates as well.

3. Reconcile any discrepancies

Once the matching portion of the process is complete and you’ve reviewed your policy, you need to reconcile the results. It’s not uncommon to find that everything doesn’t match up exactly.As a next step, talk to your team to get clarification. It’s possible that old expense reports need to be updated or corrected. It could just be a typo or a misunderstanding about your policies. This will help educate your employees so they don’t make mistakes on future reports.

4. Document your findings

There’s a lot to be learned when you audit expenses. In documenting the expense data and your results, you can help make recommendations to improve the expense management process and reduce future errors. For example, you may find duplication and redundancies that you can address immediately. Or, you may be able to renegotiate contracts with vendors to reduce spending.

In the worst case, you may uncover instances of expense fraud. Those cases show where you may be at risk, sometimes leading to modifications in policy or procedures.

Challenges you may face during an expense audit

While conducting your audit, there may be some hurdles to overcome. Here are 4 common challenges that could pop up during your process:

1. Lack of a clear expense policy

Every business should have an expense policy. Not having a policy in place can be the underlying cause of many external and internal audit issues. If you don’t have an expense policy, create one. If one is already in place, review it and clarify any areas that are too ambiguous to improve policy compliance.

2. Lack of expense controls

Implementing spending limits, restricting employee spending to certain vendors, and using business charge cards are just a few of the ways to implement internal controls. These can be built into an automated tool to help streamline the process.

3. Disorganized or incomplete documentation

Do you have a standard way to submit expense reports? If not, and multiple people are submitting them in different ways, it will slow down the process. And, if documentation is less than complete, there is more room for error. Focus on creating a uniform and organized system for your team to submit expenses.

4. Time-consuming redundancies

How many people review expenses before they get to your finance team? If there are redundancies in your system, it can be time-consuming and increase costs. Streamlined, automated systems that the company controls eliminate the inherent redundancies in an employee-initiated expense reimbursement process and can help with risk assessment.

How to streamline expense audits

Once you have gone through the expense audit process once manually, you will understand exactly how challenging it can be. It takes time that could be spent on building and growing your business.

Embracing expense management automation removes the cost of teaching your team how to audit expenses, as well as the potential for human error. These are common benefits you will receive when choosing an automated tool:

• Creating a digital expense policy
• Automatically categorizing expenses in real-time
• Digitizing and matching all receipts and invoices
• Built-in expense and category controls‍

How Ramp eliminates tedious expense audits with automated controls

Manual expense audits drain countless hours from finance teams who already have full plates. You're stuck chasing down receipts, cross-referencing transactions against policies, and playing detective to spot duplicate submissions or out-of-policy spending. By the time you catch an issue, the damage is often already done—and you're left scrambling to enforce policies retroactively.

Ramp transforms this reactive process through intelligent automation. Our expense management platform's real-time expense controls act as your first line of defense, automatically flagging or blocking transactions that violate your company policies before they happen. When an employee tries to book a flight outside approved vendors or exceed meal limits, Ramp intervenes instantly—no more discovering policy violations weeks later during manual reviews.

The automated receipt matching feature tackles another major audit headache. Instead of manually matching hundreds of receipts to transactions, Ramp uses OCR technology to automatically capture and pair receipt data with the corresponding expense. The system extracts merchant names, amounts, and dates, then validates this information against card transactions. This means you spend zero time on data entry and can focus on reviewing only the exceptions that actually need your attention.

Ramp's audit trail functionality provides complete visibility into every transaction without the manual documentation burden. Each expense automatically captures who spent what, when, where, and why—including any approvals, policy overrides, or modifications.

This comprehensive recordkeeping not only satisfies compliance requirements, but also makes month-end audits a matter of minutes rather than days. You get the thoroughness of a detailed manual audit with none of the manual work, freeing your team to focus on strategic financial planning instead of expense policing.

Say goodbye to manual expense audits

Ramp's modern finance operations platform eliminates tedious busywork like manual expense audits, allowing your staff to focus on higher-value work. More than 40,000 businesses have saved 27.5 million hours with Ramp. What could your team do with that kind of time savings?

Try an interactive demo and see how Ramp can help.