The overall definition of an expense report includes both reports, the one prepared by the company for its own sake and the one employees draft for the sake of reimbursement. Both the reports are dealt by the accounting department of the company and changes can be made to the report following company rules and regulations.
Every company has to deal with expense reports presented by the employees.
An expense report is a form that an employee fills out for all the expenditure he incurred for business related work which the company then reimburses to the employee. This includes expenses like airfare, local tickets, food, petrol, lodging, parking charges, etc. However, for this the employee needs to keep track of whatever he has spent out of his pocket for the sake of any business activity. Receipts should be kept safe if the employee is to be reimbursed. Furthermore, receipts are also required to keep track and record of business costs and activities. If the employee is not sure what to include in the expense report then he can contact the Human Resource (HR) department of the company for further assistance.
An expense report is prepared by all the companies. They are quite useful for the following reasons:
This report keeps track of all the expenses the business had to face during a certain time period. The overall report can be made monthly, quarterly or annually. Yearly expense reports are compulsory for tax purposes by the Internal Revenue Services. Whatever period the report falls in, it contains every minute detail of where the money was spent. This account is further divided into levels and then further into departments. The expense report prepared helps the company to estimate what percentage of the overall expenses incurred is spent by which department and thus to examine its productivity accordingly. However, one thing to be careful about while preparing the expense report is the accuracy of expenses. The accounting department of any company should make sure that the expenses showed in the report are accurate and true.
Expense reports help businesses in decision making. It gives a clear idea about the areas of the company which are incurring high costs but yielding minimal profits. During times of economic downturn or downsizing, the company can look upon its expense report and decided what areas of activity in the company it can cut down or what managerial staff it can eliminate to reduce its overall cost and to attain higher profits in future.