Ramadan Benefits in the Workplace: A Guide to the UAE and MENA Region

Internal control over financial reporting (ICFR) refers to the legal obligation of a company to provide accurate financial statements. It requires you to adopt policies and processes that show the true picture of the company's finances. This involves:

• Avoiding errors, fraud, or omissions 
• Meeting deadlines 
• Reviewing statements regularly.

An example of ICFR is inventory control, which involves maintaining accurate records of the company's goods. This requires adopting practices such as:

• Maintaining documents, such as receipts, shipments, and adjustments
• Segregating duties to different individuals or teams for handling, recording, and verifying inventory
• Matching physical inventory counts with recorded inventory levels
• Valuing inventory in accordance with generally accepted accounting principles (GAAP) principles, such as FIFO, LIFO, or the weighted average method.

These practices minimize the risk of inventory discrepancies and enhance the accuracy of financial statements.

What is the Purpose of ICFR?

ICFR is mandatory as per the Foreign Corrupt Practices Act (FCPA) of 1977 and the Sarbanes-Oxley Act (SOX) of 2002.

FCPA requires public companies to establish and maintain accounting controls. This reasonably ensures that financial statements comply with GAAP.

SOX takes this a step ahead and mandates public companies to assess the effectiveness of ICFR efforts and share the results with the public. Additionally, it demands large companies to get independent auditors for the evaluation.

Why is Internal Control Over Financial Reporting Important?

ICFR’s purpose is not restricted to being a statutory obligation. Here are five reasons why ICFR should be on your priority list:   

Accurate Financial Statements

ICFR ensures accurate financial statements that reflect the company's financial position and performance. Such reports enable investors, creditors, and internal management to make informed decisions.

Error Reduction

ICFR emphasizes the use of automation, standardized procedures, and clear documentation. This reduces the risk of errors due to human oversight, saving time and resources.

Preventing Fraud and Misconduct

ICFR employs strategies such as segregation of duties, multiple approvals, and regular audits. This reduces the chances of oversight and ensures employees do not engage in fraudulent activities.

Reliability

Stakeholders (including investors and creditors) rely on financial reports to assess a company's performance. Effective ICFR policies build confidence in the company's financial reports. 

Avoiding Costly Errors

ICFR detects errors and discrepancies before they can escalate into expensive matters. This saves significant expenses and protects its long-term viability. For example, identifying accounting errors eliminates the need for financial restatements.

What are the Components of Internal Control Over Financial Reporting? 

There are five main components of internal control over financial reporting. These are defined by the Committee on Sponsoring Organizations (COSO) of the Treadway Commission. 

These five components are also known as the COSO framework.

Control Environment 

The control environment includes the organization's standards, processes, structures, and values. It comprises:

• Ethical values of the organization
• Organizational structure and authority workflow
• Processes to build a competent team
• Focus on performance measurement, incentives and rewards.

These elements create an environment that fosters internal control in the organization.

Risk Assessment 

Risk assessment is an agile process for identifying and assessing risks. It involves:

• Identification of potential risks that impact the ICFR efforts. This includes both internal and external risks.
• Evaluation of the potential impact of identified risks. Some risks have a higher likelihood and a greater impact than others.

For instance, an internal risk could be employees intentionally inflating their expense reports to receive higher reimbursements. The potential impact will be financial misstatements if the risk goes undetected. 

Control Activities 

Control activities refer to the plan of action to address the risks identified during risk assessment. This requires establishing specific policies and procedures, such as:

• Segregation of duties to prevent fraud and collusion
• Controls in information security, application development, and system maintenance
• Implementation of entity-level controls, such as reviewing differences between planned budget and expenditure
• Employing preventive control, such as limited access to IT systems and automated approvals
• Using detective control to identify misstatements via reconciliations and management review controls

One such example would be accounts payable automation to eliminate manual data entry. For instance, an OCR-based automation tool will improve receipt retrieval if there are recurring manual errors.

Information and Communication 

Information and communication ensure that key stakeholders know their roles and responsibilities. It involves:

• Defining expectations from each stakeholder in the financial reporting process
• Educating employees on ICFR policies, procedures, and compliance requirements
• Providing channels for reporting concerns and issues related to ICFR.

An example would be communicating reimbursement policies to manage company spending. These rules set clear limits and expectations for employees. 

Hence, if the policy says entry-level employees can't claim travel expenses, they should not submit such expenses for reimbursement.

Monitoring Activities

Monitoring activities involve regular review of financial controls and processes to identify and rectify issues. It includes the following steps:

• Review expense reports, receipts, and other data to verify the accuracy.
• Test sample data to ensure that controls are operating as intended.
• Detect unusual patterns or anomalies in the data.
• Verify that employees are following established policies and procedures.

One such example would be reviewing travel expense reports as a part of expense management. It involves verifying receipts and approval compliance. Any detected exceptions trigger investigations and corrective actions.

A Better Way to Manage Internal Control Over Financial Reporting

Setting effective policies for ICFR requires financial data visibility and proper reconciliation processes. Hence, achieving this demands more than policies and procedures. 

You need software to support operational efficiency transformation. Here is how Pluto offers a helping hand to get better control over your ICFR efforts: 

Seamless Financial Reporting 

Pluto generates detailed financial reports, providing more accurate and effective financial reporting. You can automate the process of data entry with OCR-based receipt capture. This reduces the manual errors and ensures accuracy. 

A multi-layer approval workflow ensures that financial transactions are reviewed and authorized on time. This helps you comply with company policies, enhancing control and accuracy.

The seamless integration with accounting software provides real-time data sync. This keeps the data up-to-date, enabling faster report generation.  

Simplify Financial Audit 

Pluto centralizes financial data, enhancing auditing capabilities.

Document management becomes simple with the easy uploading and retrieving of financial records. You can bulk download all audit logs and supporting files in a single click. This eliminates the time-consuming task of searching for and gathering individual paperwork. 

Pluto's automated systems keep expense records for all financial transactions. As a result, auditors can trace every step of the transaction, ensuring transparency and accuracy.

With end-to-end encryption, Pluto meets bank-grade security standards to safeguard sensitive financial information. This ensures the safety and easy accessibility of financial data. 

Accounts Payable Automations 

Pluto automates the accounts payable (AP) process to simplify procurement and payments. From purchase request (PR) to goods received notes (GRN) matching, you can streamline the entire AP process. 

Multi-layer approval workflows accelerate purchase requests and approvals. The purchase order (PO) process becomes faster with custom workflows and ERP integration. 

Pluto automates the entire invoice management process. OCR technology makes it easy to capture and auto-fill invoice details, ensuring accuracy and speed.

Pluto's cash flow management features provide alerts for upcoming payments. This enables you to schedule payments and avoid penalties. 

Budget Control 

Pluto enables budget control by facilitating spending limits and approval workflows. 

Not only can you decide the limit for corporate cards, but also reject an expense if it goes against company policies. In contrast, you can also approve the spending limit for legitimate expenses.  

This ensures that employees adhere to predefined budgets. Moreover, this gives your finance teams immediate visibility into spending against budgeted amounts. 

ERP Integration  

Pluto's ERP integration streamlines vendor management and fosters an efficient control environment.

It imports vendor lists from your ERP and exports them back. This reduces data discrepancies and duplicates, leading to data consistency.  

Pluto's dashboard further makes tracking invoices and payments straightforward. This simplifies the payment and reconciliation process, preventing any errors. 

Expense Management  

Pluto automates and simplifies expense management processes. 

Each expense prompts a WhatsApp notification for employees to upload receipts. Administrators and managers also receive notifications to approve expenses. Approved expenses get reimbursed immediately to employees' bank accounts.

This seamless approval workflow ensures proper control and accurate financial reporting. 

Go Beyond Statutory Obligations

ICFR is not just a legal compliance. It is a practice to ensure financial visibility and control. While implementing policies and procedures is the main focus, finding the right tools to support your journey will make the process easier.

Pluto automates your financial processes to reduce manual errors and accelerate reconciliation. You close books 10X faster with more confidence. 

Book a demo today, and see how Pluto gives you better control and visibility from day one!

Many companies require in-person meetings, site visits, or attending events. Whatever the business-related travel may be, fuel reimbursement comes into the picture.

What is Fuel Reimbursement?

In a nutshell, fuel reimbursement is when an employer reimburses you for the cost of fuel used for business purposes.

While other countries may consider this a travel expense or a mileage reimbursement, the UAE considers this a 'fuel reimbursement.'

{{take-control-banner="/components"}}

Why Did Reimbursing Travel Expenses Grow?

In a post-pandemic world, where many companies are going back to the norm of office work, it is common for travel reimbursement costs to increase.

The mileage reimbursement rate has risen with regular office hours, more in-person meetings, and less remote work. But that's not the only reason.

Due to the surge in fuel costs globally, it's no surprise that consumers are becoming more aware of their travel expenses.

The UAE alone has seen a significant spike of 74% in fuel prices and petrol prices over the last 7 months, indicating that reimbursing travel expenses grew.

Subsequently, UAE companies have seen a 38% increase in fuel reimbursements and travel reimbursement requests from their employees. Inflation alongside a post-pandemic world, fuel reimbursement expenses have become the most requested reimbursement category in the UAE.

A study by Bayzat has shown that fuel is among the most requested reimbursements category for UAE employees, with an increase of 18% in the average amount per reimbursement since January.

This indicates that companies and employees have spent more time managing and filing fuel reimbursement expenses. 

Unsurprisingly, the cost of average travel reimbursements has increased with the significant spike in fuel prices and petrol prices these past few months.

With Pluto's corporate cards, companies can wave goodbye to everyday fuel reimbursement expenses' pain points by issuing their employees fuel cards to keep track of their fuel expenses and travel reimbursement costs.

{{cta-component}}

Why Use Pluto Fuel Cards For Fuel Reimbursement?

There are many advantages to using Pluto fuel cards for business travel expenses:

Create unlimited fuel cards

Create and distribute as many virtual or physical fuel cards as needed for your employees, so you won't have to worry about travel expenses, mileage reimbursement requests, or having to reimburse employees.

Set limits on fuel cards

Create fuel cards for employees with daily, weekly, or monthly spending limits to keep track of employees' fuel expenses.

Track fuel expenses in real-time

It's essential to keep track of what is being spent and where. With Pluto, you can:

• Get notified as soon as a fuel expense is made so you know who spends what, where, and when.
• Keep track of average travel reimbursements' costs, travel expenses, and employee expenditure data to avoid going over budget on fuel expenses.

No more end-of-month expense reports on fuel!

Digitized receipt reconciliation

Whether your employees are using personal vehicles or company vehicles, they can simply make a transaction with their personal card, snap a picture of the receipt and upload it to the Pluto dashboard for fuel reimbursement.

Alternatively, UAE companies can issue their employees virtual or physical cards, and the receipt can be attached to the business expense by dragging and dropping it onto the Pluto dashboard.

No more searching through piles of paper receipts! 

Fill up your tank anywhere

Once you issue your UAE employees a virtual or physical fuel card, they can use it at any gas station in the UAE for business travel expenses.

While requested reimbursements for fuel expenses grew over five-fold over the past couple of years, there is a solution to make CFOs' and finance teams' lives easier; Pluto Card.

With Pluto, finance teams have an all-in-one integrated platform for fuel reimbursements, budget & spend control for business travel expenses, and fuel receipt reconciliation.

Fuel Reimbursement vs. Mileage Reimbursement

When looking for information about fuel reimbursement, another term that you may stumble on frequently is mileage reimbursement. While they are similar and sometimes interchangeable, they are not the same.

What is Mileage Reimbursement?

Mileage reimbursement refers to the practice of reimbursing employees for business-related travel expenses.

While it accounts for fuel, it also considers lease, vehicle depreciation, and other car-related expenses. This type of reimbursement is usually given per mile driven.

In some countries, mileage reimbursement refers to accounting rules and categories that help standardize expenses.

What is Fuel Reimbursement?

Fuel reimbursement, on the other hand, only covers the cost of fuel used for business travel. It doesn't take into consideration any other car-related expenses. This type of reimbursement is usually given based on receipts.

The difference between fuel reimbursement and mileage reimbursement is that mileage reimbursement takes into account all car-related expenses, while fuel reimbursement only covers the fuel cost.

How Does Fuel Reimbursement Work?

If you use your car for business purposes, you can be reimbursed for the fuel costs incurred. The reimbursement is usually calculated based on the number of kilometers traveled or miles driven.

However, to qualify for fuel reimbursement, you will need to keep accurate records of your travel expenses. This includes maintaining a logbook of your travels and keeping receipts for all fuel purchases.

To ensure that employees are reimbursed correctly, they need a receipt and an accurate logbook. Fuel and travel expenses can be included as costs, but you must show all travel logs if necessary.

What Counts as Business-Related Fuel Reimbursements?

Here are some examples of obvious and less obvious fuel expenses that you can get reimbursed for when you are an employee:

• Traveling for a client meeting;
• Driving to pick up anything on behalf of the company;
• Driving to the airport to pick up a client or a colleague;
• Going to another city for a business-related event;

Anything done to advance the business, big or small, is business related.

Is Commuting to Work a Business-Related Expense?

While some big corporations may reimburse you for commuting to and from work, typically, commuting is not considered a business expense.

What to Track For Fuel Reimbursement?

Keeping a gas log is one of the best ways to ensure employees are correctly reimbursed while companies have a clear overview of their travel expenses.

Last but not least, when you put fuel reimbursements into your profit and loss statement to apply them as costs (which you should), you must have a detailed log of travels - in case the tax authority wants a record.

Here is the main employee expenditure data that you should store in your fuel reimbursement logbook:

• Date of each journey
• Start time and end time of driving.
• Purpose of the trip.
• Kilometers driven.

If a company provides employees with company cars, this is all. But, if you're filing for fuel reimbursement while traveling with your personal vehicle, you will have to provide the following:

• Brand of the car and the year it was made.
• Average fuel consumption as per the car documentation.
• Engine size or engine capacity.
• Copy of car technical documentation.

Does an Employer Have to Pay For Fuel?

Most companies reimburse fuel expenses for employees who need to travel for business, but there might be some limitations. For example, a company may ask you to use its corporate Careem account for business travel.

Typically, if you incur the cost of fuel, your company will reimburse you as it is a cost tightly associated with the business.

Is Fuel Reimbursement Tax Deductible?

A massive shift for UAE companies will be the introduction of corporate taxes in 2023. With a corporate tax rate of 9%, UAE companies must keep track of all their spending. Fuel reimbursements fall under that category, as they can help reduce the amount of taxable income that a company has.

If you have a fuel reimbursement policy in place, it will help ensure that all of your employees are mindful of their spending on fuel and that they only claim back what they have spent.

Pluto allows UAE companies to issue unlimited fuel cards while centralizing the expense in one dashboard, so you can see in real-time how much is being spent and the number of tax-deductible costs your employees are making.

Travel and expense management is crucial for ensuring that business-related travel expenses are kept in check. However the accurate collection and reporting of all travel-related expenses pose a significant challenge.

As the person in charge of managing your organization's finances, you should be obsessed with making all expense management as efficient as possible in order to save money.

But how can you simplify the travel and expense management process when there are so many moving parts and people involved? By using the right tools for the job.

In this guide, you’ll learn the importance of having a good travel and expense management policy, how to make your T&E management more efficient, and what to look for in travel and expense management software.

What is travel and expense management?

Travel and Expense (T&E) management is the process companies follow to monitor and control business travel expenses. T&E management is vital as it affects the company's financial well-being directly by ensuring all travel-related expenses are tracked for tax deduction purposes.

T&E management involves tracking and controlling expenditures such as flights, accommodation, meals, and client entertainment. Effective T&E management ensures that these costs are necessary, reasonable, and aligned with the organization's policies and goals. This management is particularly vital as travel and entertainment expenses can quickly accumulate and become significant financial commitments for businesses.

Why is travel and expense management important?

As a finance professional, you know that cost management and expense reduction are crucial aspects of financial management work. One of the ways you can do this is by tracking all deductible expenses for tax reduction purposes.

And when it comes to the hierarchy of expenses you need to keep track of, those related to corporate travel and entertainment are of particular importance.

According to Mastercard, corporate travel and entertainment expenses have become the second-highest expense category.

But not only does T&E account for a large portion of the business expenses that companies have to deal with, but it’s also been identified as the second most difficult operating cost to control.

That’s why it’s so important that your organization develops and maintains effective T&E management policies, and uses the tools available to simplify T&E management.

The challenges of travel and expense management

Managing travel and expense (T&E) can be a complex task, often fraught with a range of challenges. These challenges can significantly hinder the efficiency and effectiveness of an organization's T&E process. Key challenges include:

1. Limited Fund Access: Employees often face constraints in accessing funds for travel-related expenses, which can lead to delays and complications.

2. Security Risks: The management of expenses, especially in a digital format, raises concerns regarding data security and the risk of financial fraud.

3. Outdated Policies: An organization's T&E policies may become obsolete or fail to align with current business needs and practices, leading to inefficiencies and policy breaches.

4. Lost Reports: Misplaced or lost expense reports can disrupt the reimbursement process, leading to employee dissatisfaction and administrative headaches.

5. Inefficient Bookkeeping: Manual and outdated bookkeeping methods can result in errors and inefficiencies, making it difficult to track and manage expenses accurately.

6. Lack of Spending Visibility: Without clear visibility into T&E spending, organizations struggle to control costs and make informed budgetary decisions.

7. Slow Reimbursement Process: Delays in processing reimbursements can demotivate employees and hinder efficient financial management.

How to make travel and expense management process efficient

1. Review your travel expenses and reimbursements

One of the first things you should do is take a look at your current travel expenses to see if there are any changes to be made.

Business travelers will always need to take trips, but perhaps there are some interactions that could be handled via videoconferencing.

You can also look for ways to minimize the expenses that need to be reimbursed. For instance, by using Pluto corporate cards, you could help eliminate, or at least reduce, the need to reimburse food expenses while giving you better control over them.

2. Examine your travel policy and keep it simple

If you are having trouble with your T&E management, you should take a look at your current travel policies (and if you don’t have one already, you should make that your top priority).

Your T&E policies need to strike a balance between flexibility and strictness. Too flexible and you create waste; too rigid and you limit the ability for people to do their jobs.

A good T&E policy should include the following:

• How travel will be booked
• The process to follow for reimbursement (including what type of supporting documentation is necessary, due dates, and other stipulations).
• Any budget or spending limits, including the specific transportation methods or hotels that can be used.
• Meal allowances.

And you want to keep your policy simple and easy to read. Minimize the jargon, use short paragraphs, and a simple format with bullet points, tables, and clear headings.

You should continuously review your expense policy, particularly as your business expands, to ensure that it’s aligned with any changes in your organization. 

3. Go paperless

Your team should be able to access your expense policy from anywhere and at any time. But more than that, you should aim to digitize the expense report process as much as possible.

For instance, implement the ability to submit digital expense reports and capture receipts digitally. Not only will this allow you to get a clearer view of your operations at all times, but it will help simplify your bookkeeping and easily manage receipts.

Pluto has this function! 

4. Use travel expense management software

Through effective use of travel and expense management systems, you can consolidate the different scaffolds in your expense process, automate them, and eliminate time-consuming approvals while minimizing, or outright eliminating, human error.

Using Pluto allows you to cut a lot of the fat out of the reimbursement process. Automate reports, data gathering, and approvals for expenses that meet your policies, leaving only those that don’t meet your policies for manual approval. 

Furthermore, it can help you detect fraud by auditing your reports for duplicate expenses and any other anomalies.

And through software integration, you can use these different tools to create a unified T&E management process. 

5.  Top solutions for travel and expense management

There are many tools you can use to make your T&E management more efficient, for instance:

• Pluto Card allows you to issue unlimited virtual cards, create travel specific card limits  monitor spending in real-time and most importantly, it allows your employees to reimburse quickly!
• A travel expense tracker can provide you with automated expense reporting and expense tracking.
• You can use a travel management platform that allows your employees to book flights, trains, and hotels and even rent cars from one place.
• Pluto mobile app makes the expense reporting process much simpler for your employees.
• You could take data from Pluto and travel management system directly into your accounting platform to further automate and simplify the T&E management process.

Expense management software for T&E management

One of the best ways to simplify your travel and expense management is by making use of the right T&E management software. However, with the increasing amount of options available, knowing which one fits your company best can be difficult.

Since no two businesses are exactly the same, there won’t be a one-size-fits-all solution. Having said that, you’ll have an easier time choosing between the different options by focusing on the specific features that you need, or at least should consider, in a T&E management platform.

Key features to look for in a travel and expense management software

1. Virtual cards

Pluto gives you the ability to create virtual cards for online purchases. These cards can be generated as single-use or recurring, giving you complete control in terms of how you set up your spending limits.

Virtual cards offer you similar benefits to corporate cards, in the sense that you get full visibility of your expenses and your employees don’t have to pay upfront, but they have the added benefit of being more customizable.

2. Flexible spending limits

Our expense management software can also give you a lot of control and flexibility over the spending limits that you set. Pluto allows you to set specific spending-limits for vendor and change them in real-time online. 

This allows you to track expenses for specific countries or cities, while removing the need to manually configure spending limits each time someone makes a trip request.

3. Expense reports and analytics

If you want to make your expense management more efficient, you’ll need accurate data and insights into the spending habits of your employees.

Pluto gives you real-time reporting and analytics, to give your finance teams an easier time combing through all the expense data. For instance, a system with robust reporting capabilities should:

• Categorize expenses and organize reports by expense type
• Reconcile your reports
• Give you spending insights across all your departments
• Keep track of violations of your expense policies
• Provide you with real time spend visibility

By getting a clear picture of your expenses, you’ll have an easier time ensuring policy compliance, preventing fraud, and reducing travel costs.

4. No FX fees and multi-currency functionality

If your employees travel internationally frequently, you’ll want a product that comes with a card that doesn’t have additional fees or surcharges for international purchases.

At Pluto we have 0 FX fees. Furthermore, you’ll have an easier time managing these expenses due to multi-currency functionality automatically converting all transaction information to your country’s currency.

5. Mobile functionality

If you are trying to simplify your expense reporting process for travel expenses, then you need a way to work on those expenses on the go. Pluto’s mobile app would allow your employees to report their expenses right away from any location, while also giving them the ability to submit receipts digitally.

6. Integrated card management

If you opt for a software provider that also offers corporate credit card services, you’ll be able to automatically reconcile expense report entries with your card statements, detect any expense bottlenecks, and generally reduce the chances of fraud or misuse. 

Pluto card management software will also give you more control over your corporate spending. Plus, you’ll be able to set and control your spending limits with much more ease.

7. Compatibility with other tools

When it comes to the use of technology in expense management, the more, the merrier.

Pluto can be integrated with your accounting software so that it can automatically populate expense reports and simplify your reimbursement through the use of your organization's accounting data.

Furthermore, by integrating your TEM system with your travel management system you can instantly take the travel booking information and add it to your expense reports.

8. Automated workflows, expense categorization, and tax calculation

The entire point of using travel expense management software is to automate as many processes as possible.

This includes the ability to customize your travel policies and approval workflows, categorize expenses for more straightforward tax calculation, and determine whether they are tax deductible or not.

Furthermore, by categorizing your expenses, you’ll have an easier time complying with the tax regulations of your country.

9. Scalability

One feature that is sometimes overlooked in software platforms is the ability to scale your operations as your company grows. You don’t want to choose a system now only to realize it no longer meets your needs further down the line.

In this regard, Pluto is a great pick as we have the backend to support any business sidez from small teams to enterprise level accounts. 

Key takeaways

Effective expense management is all about visibility, flexibility, control, and automation. The most common pain points from T&E management come from outdated policies and manual inputs, which you should seek to update and simplify via means of a robust expense management platform.

When it comes to making your travel and expense management more efficient, the key things to remember are:

• Review and update your policy continuously to ensure it meets the needs of your business and employees.
• Examine your current expenses to look for opportunities to reduce reimbursements and consolidate expenses.
• Use Pluto to automate approval workflows and simplify the expense reporting process.
• Pluto also offers strong reporting capabilities, gives you a lot of flexibility for spending limits, and can be integrated with other tools for maximum effectiveness.

‍