Why are receipts such a big deal for accountants?

This could have gone in a few forums, but I really do want to know.
Apparently accounting requires years of school with possibly weeks of additional coursework later; why does it seem like none of that education is helpful in sorting things out when someone doesn’t have a receipt?

I’m telling you I had to buy a widget last Tuesday for $29.95. The widget is right there. The credit card billing history has an entry from Widgets-R-Us for $29.95 listed last Tuesday. Whoops I lost the receipt (or maybe it was an online site with not great reporting, or an auto-billing system when our account gets randomly low).

Why do I get a response like I peed in the coffee maker? Much hand-wringing… threats of taking it out of my paycheque… waddarewegonnado…
I manage dozens of servers for the company, each hosting multiple custom client applications and databases - our developers and analysts do dumb stuff that I have to fix monthly, and I’ve never gotten anywhere near as bent out of shape.

Accountants - how have I caused the end of your world, and how do you not have the tools to put it right?

The CC bill is your document; what the accountant wants is something from Widgets-R-Us with all the information that they are required to provide where you are. In the UK, this would show VAT (and their registration No) and their business address, maybe yours shows local and federal taxes.

The accountant also does not want to trawl through a list of unrelated stuff: your wife’s flowers. your GF’s jewellery and last week’s shopping. Receipts are legal documents, universally recognised, so unless you have some system for electronic accounting, receipts are here to stay.

The CC bill shows you bought one or more products at Widgets-R-Us that totalled $29.95. It doesn’t show whether that was one widget, three widgets, or a widget for the company and four gizmos that are destined for your spouse’s side business.

It’s not a lack of education; it’s a lack of verification. Remember the old line about trust but verify? Accountants don’t even trust; they jump straight to verify, and your CC bill does not verify that you spent $29.95 on a single widget for the company’s benefit. Padding the bills is a time-honored way for an employee to steal from the company, and the company wants proof that you are not doing that.

If you are doing purchasing on behalf of a business, obtaining and retaining receipts is such a basic task that it’s understandable that accounts gets pissed off with people who can’t manage something so fundamental.

This, exactly. And, if your company’s books ever get audited, a consistent lack of documentation and verification is an enormous red flag to the auditors.

Right. A company does not pay taxes on the costs incurred during the normal course of business.

If a company were to be audited, then the auditors will look at the receipts to make sure that what you bought was related to your operations, and not something that you just bought for yourself and wrote off the taxes.

Not having that receipt means that the IRS will not be able to tell if you bought a business widget or a personal item. With the IRS, it’s usually on you to supply proof, so if you don’t have that receipt, you will be docked that deduction.

This * 1.0 EE06


And it really depends on the company. I have women’s both companies that would rather shoot than ask questions and others who don’t care that much. Credits card statements were fine.

Because it’s easy to spend too much and not have proof

We’ve had a few controllers in my place of work, most were OK, but one was a miser and the other was likely a thief, in cahoots with the actual thief or lazy, or maybe all three.

In my business I work for a charity. We help find people jobs to get them off welfare.

I deal with a lot of extremely high end people. You know the rich that not only LIKE to give to charity they like to BE SEEN giving to charity

And a simple thing like a cab ride to a fancy club with a donor can shock an accountant, because these people don’t have to care about money and you have to go along with it, or risk offending them, which means no donations and no entry jobs at their companies for us to offer.

Many times, it would’ve been very easy for me to pad the bill in a lot of things, and pocket the change had accounting not been on the ball.

How often and how thoroughly do auditors follow-up with vendors to verify that receipts haven’t been falsified?

If you falsify a receipt, you’ve graduated past any plausible deniability that you just made a clerical error. And until very recently it’s been quite hard to forge a convincing document.

And yes, when I worked in procurement, we would get inquiries from auditors for confirmation of purchases.

Now our expense reimbursement processing system is pretty good at both document validation (scanned images of receipts) and pattern recognition to identify suspected fraud. So if we only audit 1-in-10,000, you do not have a 99.99% chance of getting away with it. It used to be random but isn’t any more.

In Surely you’re joking, Mr. Feynman!, Richard Feynman briefly recounts his misadventures with having to show receipts. About three-quarters down this page, and the first part of the next.

“Don’t you trust me?”

“Of course we trust you, but there are people around who are not as honest as you and we cannot be seen to treat people differently.”

When I was a fleet manager we paid for fuel through a dedicated fuel card. I also recorded the mpg of each vehicle. One stood out as being more thirsty than other similar cars and it turned out that the drive, a manager, was going into the garage each week and his wife would pull up on the other side of the pump. He would half-fill his tank and then pass the nozzle to his wife. It was quite clever because he never bought more than his tank could hold.

His very words when challenged: “Don’t you trust me?”

And even if you do have some other form of documentation, or combination of forms, with all the same information, pedigree, etc., they’ve got a well-established procedure in place, and that procedure is designed around using receipts, not other documentation, because that’s what most people do. Bring in other documentation, and you’re asking them to create an entirely new process just to deal with your expenses.

Because you peed in the coffee maker. I.e. you failed to follow simple universal rules designed to keep business running smoothly, and this failure is creates extra work or makes it plain old impossible for them to reimburse you.

Could the rules be different? Sure, but that makes it easier to rip off the company, or the IRS, so that’s not going to happen.

Could they bend the rules for you? Possibly, but then how would you learn that peeing in the coffee maker is a bad thing, since obviously you didn’t go into this exchange with the humility you would have had if you knew this.

Fraudulent reimbursements are, by far, the way people embezzle from businesses, and techniques range from brazen to incredibly subtle. There’s good reason for the strictures on employee reimbursements and why a lot of businesses provide alternatives to discourage the practice as much as possible.

Feynman’s anecdote is especially infuriating because, combined with his general childish special snowflake-ism, being an otherwise competent and trustworthy employee while casually stealing from one’s employer is so typical as to not even be a noteworthy MO.

This one area where online shopping is incredibly helpful (at least, at the biggest sites). For example, on Amazon, I can view an invoice for any order I’ve ever placed. Same thing on newegg (one of the oldest online retailers, focused on PC supplies). Even many physical stores have the option to email you a receipt or keep it online (Best Buy and Office Depot both do this).

For physical receipts, what I do is just snap a picture with my cellphone and email it to myself (I use webmail so I can access that picture anywhere with internet). I’m terrible at organizing physical stuff, so this has saved me a lot of headache.

Not too helpful for existing situation, or what you were asking about, but it will make future life easier.

My accountant doesn’t look at receipts (though I do keep them). His bookkeeper looks at my credit card statements and bank statements and they flag anything they’re unsure about so I can provide information (but not receipts). For example, a purchase at an ambiguously store–travel supplies purchased while heading to location. Liquor store? Holiday gifts for colleagues. Grocery store? That was personal, my private CC wouldn’t work in the POS machine that day. Etc. If I spend personal cash on something business related, I keep those receipts separately and the business reimburses me. My accountant uses a summary I provide him and doesn’t look through my individual receipts. I never use cash from the business for anything; if there’s a cash need I pay it from personal money and get reimbursed.

In production, when working for another company, I’m expected to produce receipts for everything that gets reimbursed, but for smaller amounts it can be fudged. Example: $100 tip to Skycap for taking care of all our gear.

Yes - there may well be out-of-pocket expenses for which no receipt is given or expected and an accounts clerk will be used to dealing with them. Years ago I used to help set up exhibitions and there were various people that had to be b̶r̶i̶b̶e̶d̶ paid off the books: electricians, plumbers, forklift drivers, painters, riggers and carpet layers etc.

Management had a pretty good idea of how much was needed and I was given a float. Naturally, any cash left over was returned.

Feynman’s anecdote is especially infuriating because, having asked a favour of him, they bury him in paperwork, which indicates not ill will, but only how badly organised and managed they are.

It’s not like he refused to provide a simple receipt, or didn’t want to sign for his wages: and it’s not like he punished them for being incompetent. He drew an arbitrary line on how much bullshit he was willing to put up with, but that line was well out past required politeness, and well out past allowance for individual failures.