These changes are consistent with a global plan drawn up by the Finance Action Task Force (FATF), an inter-governmental body to combat money laundering and terror financing, of which India is a member.  FATF issued updated Recommendations in February 2012, although many countries had already incorporated these offences in their money laundering laws. Prosecutions in India under such legislation are likely to lead to faster trials as offences are tried in special courts where the onus is on the accused to prove innocence.

There are many organisations that use various expense types, such as travel, entertainment and hotels as a ‘perk’ – a means of giving benefits – to some senior employees while avoiding tax. Unfortunately this tarnishes those that play fair, those who pay taxes where and when due.  The key here is to differentiate the former from the latter by ensuring that there are robust processes and systems in place that support auditing and that make information available within seconds, not minutes.

Not only does this place the emphasis on the CFO and the CEO, to ensure that the organisation has strong systems and processes in place to provide compliance, it also places the onus on ALL employees to ensure that they observe such systems and processes if they are to avoid falling foul of this new law!

When accurate and credible information is to hand on a click of a button, people ask fewer questions. Expense On Demand offers such a solution, enabling organisations create a culture that supports compliance with regulation and helps individuals avoid prosecution. For example:

• Expense On Demand allows an organisation to set-up any complex expense policy easily. Many organisations have comprehensive expense policies. Unfortunately, in a paper based system polices may be unenforceable because they require labour intensive manual processes.  Expense On Demand reinforces policy and prevents out of policy data entry into the system, ensuring compliance and full visibility of any employee activity.
• Expense On Demand provides a mechanism for auditing expenses such as travel or entertainment in real time. This provides organisations with a mechanism for attributing every expense item to a ‘legitimate business purpose’, including the identity of employees incurring expenses.
• Expense On Demand enables a hierarchical approval process to be put into place to provide greater control over expenses.  In operation expenses items that exceed certain limits require approval from a more senior approver such as the Finance Director. This reduces complicity and collusion, and provides an audit trail that enables organisations to defend against the actions of rogue employees.  As part of a manual system, such counter-signed approval processes could take days, if not weeks. With Expense On Demand approval takes minutes.
• Expense On Demand allows third party suppliers such as Travel Management Companies (TMCs) secure access to the system. All travel expense activity can be fully audited from the point of request to pre-approval, including the complete archive of e-mail discussions between the traveller and the agent. Once travel is completed, this can be linked to the back end of travel portals such as GDS or LCC, to lock in the audit trail.

…but nonetheless that is precisely what has emerged recently. There’s a bit of a stink emanating from the expenses of Canadian Minister of International Cooperation Bev Oda (No pun intended).

When attending a conference on immunisation of poor children in London last year, the Canadian delegation was booked into the venue, a 5 star hotel. However she was unhappy with the establishment’s No Smoking policy and sought alternative accommodation at The Savoy, no less. 3 days at this top people’s pad were expensed at CAD $1,995 and a glass of OJ was put through at a cool $16.

The difference in cost between the delegation venue and The Savoy was eventually reimbursed by Oda after the expenses were made public and the Canadian opposition party homed in on the inappropriate behaviour of the cabinet minister. Apparently $1,000 in limo charges associated with the trip has not been repaid.

Did you know Expense On Demand deployed in conjunction with a robust expenses policy prevents submission of inappropriate expenses claims for international as well as domestic business travel expenses? Click here to try Expense On Demand free for 14 days.

Follow this link to the report at The Huffington Post, Canada.

It’s our feeling that although academic research may help us to a deeper understanding of the mechanism and phenomena of corruption, it won’t lead to a ‘cure’; this type of behaviour seems to be embedded in human nature and our sense of fairness. It doesn’t take much to irritate many of us when we perceive something as unfair; for some of us in certain circumstances that may lead to corrupt behaviour to redress the balance of fairness as we see it. There also seems to be a cultural element as attitudes and tolerance vary across countries and continents.

With susceptibility to behave corruptly strongly embedded in some of us, it seems that Expense On Demand’s robust expenses management solution and policy support are essential tools in protecting organisations from expenses fraud.

Alas, this probably won’t be the final word on the MPs expenses scandal, but academic recognition of the problem might be the enduring legacy of an episode of parliamentary history that did so much to damage the reputation of British politics.

Click this link for a selection of Expense On Demand case studies.

Follow this link to the story in The Guardian.

Tax avoidance rules proposed in the recent Indian budget, whose impact on foreign investors has caused an uproar, can potentially also be used to target individual taxpayers and companies who use this mechanisms to compensate employees.

Tax authorities could use the rules, known as the General Anti-Avoidance Rules, or GAAR, to question the manner in which salaries have been structured if they come to the conclusion that the intent is to reduce tax outgo. They apply to every resident who is a taxpayer in India, including individuals, Indian companies or foreign investors, said tax experts.

Income-tax officers can thus disallow conveyance claims, car lease arrangements or book allowances or any such allowance by dubbing them arrangements to avoid tax, and even levy interest & penalty.

Companies who do not have robust employee expense management mechanisms could fall prey to this. The only silver lining is that this will apply from the fiscal year beginning April 1, 2012, and past claims will not be opened.

Tax officials could also go after companies that facilitate such arrangements rather than picking on individuals who benefit from such arrangements. As a result, companies will have to ensure that their expense policies are such that they do not prima facie and on detailed investigation allow such “re-imbursements”. They will also have to ensure that any investigation by the tax authorities can be robustly and quickly defended, without wasting the company’s time and money.

Expense on Demand, provides such a framework. It allows companies to move away from the tedious paper based employee expense management system. Expense On Demand enables employees to enter their expenses over the internet and use mobile phones to attach receipts. Managers can approve expenses and view receipts online. These then can be also checked by finance and uploaded into the accounting system.

Instant access can be provided to income tax authorities to view any claim or item online, including receipts. They can view compliance against policy and be satisfied that the company is not indirectly reimbursing employees to save salary or such incidental taxes, because each expense item carries the “business purpose” of the expense and provides all supporting information, to ensure that they are for the business of the company and not used as a mechanism to indirectly compensate employees.

See for yourself with a free 14 day trial here.

The findings show that enterprises are allocating 34% of IT budgets to cloud computing. Much of the investment is going into private cloud projects that are owned, controlled and housed for use within the enterprise. This signals that larger businesses are exploiting cloud technology in-house in the same way that smaller organisations outsource specific business systems such as Expense On Demand, a cloud based T&E expense management system.

Critical to the success of the cloud is the concept of resource sharing, which enables a cloud application provider to provide outstanding value to the many SMB/SME organisations across its client base. A key element of this is that clients do not carry the cost of ownership.

In building private clouds, larger enterprises do not exploit the economy of scale that resource sharing provides. Ownership costs such as admin and maintenance still need to be carried and private cloud applications do not deliver the same level of cost benefit as outsourced cloud applications like Expense On Demand.

The reduced cost of a cloud based application is only part of the business case supporting the adoption of Expense On Demand. See what we bring to T&E (Travel & Entertainment) expense management by following this link.

Importantly the report, T&E Expense Management: The Best-in-Class Pillars of Next-Generation Expense Management, based on research conducted in Jan-Feb 2012 across 140 enterprises, identified the strategic value, and the role of cloud technology and analytics in a ‘next generation’ approach to T&E management. 

The report positions its key findings as the Best-in-Class framework for effective expense management. Three key performance criteria were used to identify Best-in-Class companies:

• Cost to process a single expense report reduced by 60% for Best-in-Class performers
• Compliance with corporate travel policies increased 31% for Best-in-Class performers
• Unauthorised travel spend reduced by 57% for Best-in-Class performers

The report links Best-in-Class performance with the strategic use of analytics and Business Intelligence (BI). Best-in-Class companies are 53% more likely to factor T&E expense management into planning, goals and organisational objectives through analytics and BI.

Expense On Demand is cloud based and provides exceptional value by removing the need for ownership of on-premise software and associated cost and management overheads such as upgrades and maintenance.

Expense On Demand supports integration and data exchange with other systems and provides T&E expense management reporting and analysis that enables organisations to gain a better perspective for planning across operations.

Importantly, in using cost reduction and policy compliance as Best-in-Class identification criteria the report also echoes core Expense On Demand value proposition messages.

Click here to find out more about the benefits of Expense on Demand.

From the point of view of businesses dealing with mileage expenses, the tax relief on vehicles with low CO2 emissions is hard to ignore. This offers a jump start for those wishing to reduce road travel costs. Businesses that operate expense management systems as well as low CO2 emissions vehicles reduce fuel costs yet further; on average Expense On Demand’s mileage validation feature reduces claims by 15-18%.

Tax relief on low CO2 emissions cars ends from 1^st April 2013

• 100% first year allowance for very low emissions cars – under 110g/km – has just 1 year left to run

Employment law change from 6^th April 2012

• New unfair dismissal rule means employees commencing employment need to be employed for 2 years before being able to claim for unfair dismissal. This does not apply retrospectively.

Accidents at work from 6^th April 2012

• 3 day limit for reporting accidents and related HSE incidents is increased. Incapacitation now needs to be for 7 days before RIDDOR rules apply.

EU cookie law from 26^th May 2012

• Law governing website cookies takes effect and means that websites must gain explicit permission before storing cookies on the computers of website visitors. The Information Commissioner’s Office (ICO) can impose a fine of up to £500,000.

Tax allowances changes from 6^th April 2012

• Personal allowances for under-65s increase to £8105
• Basic rate tax limit of 20% is reduced to £34370
• 40% tax rate starts on income at £34371

Corporation tax changes from 6^th April 2012

• Small companies’ corporation tax remains at 20%
• Companies with profits exceeding £300,000 PA is cut to 24% and will be further reduced to 22% in 2014

Click here to find out more about the Expense on Demand mileage validation feature.

Follow this link to lawdonut.co.uk for further information on the changes for business.

Budget 2012 does not, however, reduce the cost base of business; a business rate increase of 5.6% is set to go ahead in August. Also scheduled for August is the go ahead of the previously deferred 3% rise in fuel; this is the main employee reclaimable expense on which the budget may have been able to offer some good news.

As we talked about on the blog previously, offsetting the impact of fuel price volatility with improved HMRC AMAP rates – Approved Mileage Allowance Payments – would have helped workers driving for business and claiming mileage expenses. But no such joy.

The Chancellor has chosen to increase the tax take from road fuel as pump prices hit an all time high of 140p per litre of unleaded. Further price rises look certain, and a backlash from the road transport industry seems likely; ‘military intervention’ cannot be ruled out, with the Army being prepared to step in to maintain tanker deliveries.

More than anything, this underlines Expense On Demand’s strategic approach of businesses taking control of mileage claims with robust policies and expenses management systems.

Please click here to request a demo of Expense On Demand’s great features including mileage validation.

Click here for a blow-by-blow explanation from the BBC of the changes for businesses
announced in Budget 2012.

Instead of allowing employees to book tickets, companies are  using specialist travel management companies (TMCs) to book travel for employees.  This centralises travel, ensuring company travel policy is adhered to and bulk discounts are obtained. However, this approach raises some questions:

• How do you track who is travelling?
• Who authorises travel?
• Do employees actually travel or are tickets cancelled?

A new scam that equates to nothing less than expenses fraud has
developed. Employees change the ticket to a different routing to accommodate a
holiday, or exchange one business class ticket for two economy tickets. In both
instances, the organisation is losing out.

As part of our product development road map, Expense On Demand’s newly rolled out travel booking feature with integrated pre-approval helps make organising, approving and signing off business travel a much easier process, and helps prevent travel fraud.

Travel Booking manages all travel requests in an integrated module (no extra charge!) that comes as standard for all Expense On Demand customers. It provides a secure interface allowing authorised travel agents to access the system.

Pre-approval lets claimants request pre-approval, enabling better cost control and preventing disagreements over costs by allowing sign-off by line managers before travel.

The module allows greater control over agents by selecting preferred suppliers for different elements such as flights or hotels if required, allowing you to automatically source travel requirements from the best one for your needs.

Requests are sent to travel agents for processing and confirmed bookings are entered by travel agents into employee expenses claims, saving employee and back office processing.

A summary of the main features and benefits of organising Travel Booking with Expense On Demand:

• Every booking requires pre-authorisation
• Tickets are automatically e-mailed to the employee and uploaded into Expense On Demand for audit purposes
• Every cancellation requires management authorisation
• Re-bookings, instead of cancellations are handled and monitored with equal ease
• Every travel that is ‘completed’ is validated against airline booking systems by the TMC to ensure that travel ‘actually’ occurred to the original destination and for the intended purpose
• All bookings are tracked – who is travelling, where and when – which airlines are frequented, together with routes
• Every booking, every cancellation and its charge can be monitored in real time, with reconciliation at the ‘click of a button’
• Most importantly, the organisation can monitor and ensure it makes the most of free ticket entitlements and the benefits of Airmiles

We are offering this function free of charge to ALL our existing customers for the next 6 months.

Follow this link to the Travel Booking webpage.

Fuel prices have jumped around 25% from 2010 compared with 2012, and are now at record levels, around 5% greater than a year ago. But AMAP rates, HMRC Approved mileage Allowance Payments used for calculating the mileage rate for expenses claims, have lagged behind.

AMAP had been set at 40p since 2002 and a rise was seen as long overdue. Grey fleet drivers, those that use their own vehicles for business, had been swallowing the rising costs of motoring for too long. Only last April, the rate was increased by 5p to 45p per mile.

But although increased mileage rates benefit employees, the employer sees a negative effect as the cost of doing business rises.  To control cost, employers must minimise the number of miles driven for business and implement a good expenses management system that verifies mileage, reflects the use of lower emissions vehicles and provides CO2 auditing.

Follow this link for more on how Expense On Demand verifies mileage and tracks carbon footprints.

Click here for a background article from thisismoney.co.uk.