Analytics Mindset:BluePlanet Inc. – Travel Expense Audit
Overview1
You are an internal auditor for a corporation. The company reimburses employees when they travel for work purposes using their own vehicles. To receive this travel expense reimbursement, the employee submits paperwork that lists the addresses of their departure and arrival locations, the total mileage they traveled and the total mileage to be reimbursed. If the employee has traveled to multiple locations, the paperwork will indicate the “legs” they traveled for the trip. A trip leg is the distance traveled between two points. For example, if an employee leaves their home, travels to one business, then visits another business and then returns home, the trip has three legs: (1) from their home to the first business, (2) the first business to the second business and (3) the second business back to their home.
Using this paperwork, an employee in the Payroll Department then calculates the reimbursement, calculated as miles traveled multiplied by the IRS reimbursement rate of $0.655 per mile. Employees are expected to track the mileage traveled to the nearest tenth of a mile. The company pays the employee the computed reimbursement amount in their next paycheck.
The head of the Audit Committee recently reviewed the company’s financial data and thought the amount of employee travel reimbursement might be excessive. She asked you to conduct an audit of the travel reimbursements to see if employees are following company policies.
In the past, when Internal Audit would
audit travel reimbursement expenses, the internal auditor would take a sample of the trips made by employees. The internal auditor would then use a commercial mapping service (Google Maps) to measure the distance between the departure and arrival locations. The auditor would then look for patterns in the sample and make recommendations based on their findings. Because of the time-consuming nature of gathering this data, the internal auditors were only able to look at a fraction of the nearly 4,000 trip legs that were made by employees in a year.
Recently, however, the head of Internal Audit learned about robotic process automation (RPA). RPA allows a person to program a bot to automate tasks that a human would have performed. The head of Internal Audit assigned an internal auditor to design a bot that automatically calculates the distance traveled for every trip leg. Using RPA, the internal auditor was able to collect the data for every trip leg traveled by employees for the last year. The internal auditor has given you the output from this bot to analyze in preparing your report for the head of the Audit Committee.
1 This case is based on the real-world internal audit example by Marc Eulerich, Justin Pawlowski, Nathan Waddoups and David A. Wood, “A Framework for Using Robotic Process Automation for Audit Tasks,” SSRN website, londonessays.com , accessed September 2021 . Analytics mindset case studies – BluePlanet Inc. – Travel expense audit 1© 2021 Ernst & Young Foundation (US). All Rights Reserved.SCORE no. 13759-211US_5