expense-policy-adjudicator

# Expense Policy Adjudicator

## Overview

Expense policies are clear on paper but messy in practice. "Reasonable business expenses" invites interpretation. This skill provides frameworks for consistent policy application, handling edge cases, and making defensible approval decisions.

## The Adjudication Problem

```
POLICY SAYS:                        REALITY:
───────────                         ────────
"Reasonable travel expenses"        Is first class ever reasonable?
"Business meals with clients"       What about a solo meal?
"Necessary equipment"               Who decides what's necessary?
"Prior approval required"           What if they already spent it?

Without clear framework:
• Inconsistent decisions
• Employee frustration
• Favoritism perceptions
• Audit findings
• Fraud exposure
```

## Policy Application Framework

```
┌─────────────────────────────────────────────────────────────────┐
│                    EXPENSE DECISION FRAMEWORK                   │
├─────────────────────────────────────────────────────────────────┤
│                                                                 │
│  STEP 1           STEP 2           STEP 3           STEP 4     │
│  ────────         ────────         ────────         ────────   │
│  Valid            Policy           Reasonableness   Approve/   │
│  Expense?         Compliant?       Test             Deny       │
│                                                                 │
│  Is this a        Does it meet     Is it sensible   Make       │
│  business         policy terms?    given context?   decision   │
│  expense?                                                       │
│                                                                 │
└─────────────────────────────────────────────────────────────────┘
```

## Step 1: Valid Business Expense?

### Business Purpose Test

```
BUSINESS PURPOSE CHECKLIST:
───────────────────────────

□ Does this expense relate to company business?
□ Would we expect this expense given the employee's role?
□ Is there a clear business benefit?
□ Is this expense primarily for the company (not personal)?

IF ALL YES → Proceed to Step 2
IF ANY NO → Likely not reimbursable (document why)
```

### Personal vs. Business

| Scenario | Business | Personal | Test |
|----------|----------|----------|------|
| Meal during business travel | ✓ | | Required for travel |
| Meal at home office | | ✓ | Would incur anyway |
| Team celebration | ✓ | | Team business purpose |
| Personal celebration at work | | ✓ | Personal occasion |
| Professional development | ✓ | | Job-related |
| General interest book | | ✓ | Not job-specific |
| Client gift | ✓ | | Business relationship |
| Co-worker birthday gift | | ✓ | Personal relationship |

## Step 2: Policy Compliance

### Standard Policy Limits

```
CUSTOMIZATION REQUIRED:
┌─────────────────────────────────────────────────────────────────┐
│ YOUR EXPENSE POLICY LIMITS:                                     │
├─────────────────────────────────────────────────────────────────┤
│                                                                 │
│ MEALS:                                                          │
│ Breakfast: $_______ Lunch: $_______ Dinner: $_______           │
│ Per diem option: $_______/day                                   │
│ Alcohol: □ Reimbursable (with limits) □ Not reimbursable       │
│                                                                 │
│ TRAVEL:                                                         │
│ Airfare class: □ Economy only □ Business over ___hrs □ Policy  │
│ Hotel nightly max: $_______                                     │
│ Rental car class: _______                                       │
│ Mileage rate: $______/mile                                      │
│                                                                 │
│ OTHER:                                                          │
│ Client gifts max: $______/gift, $______/year per client        │
│ Team events: $______/person                                     │
│ Home office: $______/year or one-time $_______                 │
│ Professional development: $_______/year                         │
│ Equipment: Requires approval above $_______                     │
│                                                                 │
│ APPROVAL THRESHOLDS:                                            │
│ Manager approval: Up to $_______                                │
│ Director approval: Up to $_______                               │
│ VP approval: Up to $_______                                     │
│ CFO approval: Above $_______                                    │
│                                                                 │
└─────────────────────────────────────────────────────────────────┘
```

### Policy Compliance Checklist

```
COMPLIANCE VERIFICATION:
────────────────────────

□ Within dollar limits?
□ Proper category?
□ Required receipts attached?
□ Business purpose documented?
□ Proper approval obtained?
□ Submitted within deadline?
□ No prohibited items?
□ Correct cost center/project?
```

## Step 3: Reasonableness Test

### Reasonableness Factors

```
THE REASONABLENESS TEST:
────────────────────────

Even if technically policy-compliant, ask:

1. PRUDENT PERSON TEST
   Would a prudent person spend their own money this way?
   Would this look reasonable to an outside observer?

2. NECESSITY TEST
   Was this expense necessary to accomplish the business objective?
   Could the objective be achieved at lower cost?

3. CONTEXT TEST
   Does the expense make sense given the situation?
   Were there unusual circumstances justifying the expense?

4. PATTERN TEST
   Is this a one-time situation or a pattern?
   Is the employee testing boundaries?
```

### Reasonableness Examples

| Expense | Policy-Compliant? | Reasonable? | Decision |
|---------|-------------------|-------------|----------|
| $45 dinner (limit $50) | ✓ | ✓ | Approve |
| $49 dinner every night for a week | ✓ | ? | Review pattern |
| $200 team lunch (10 people) | ✓ ($20/person) | ✓ | Approve |
| $200 solo lunch | ✗ | ✗ | Deny |
| First class upgrade ($400) on 8-hr flight | Maybe | Context-dependent | Review |
| $800 hotel in NYC | Over limit | Maybe (if market rate) | Review market rates |

## Common Edge Cases

### Meals

```
MEAL EDGE CASES:
────────────────

SCENARIO: Solo meal during day trip (no overnight)
POLICY: "Meals during travel"
DECISION FRAMEWORK:
- Day trip <12 hours: Generally not reimbursable
- Day trip >12 hours: Lunch may be reasonable
- Consider: Did they miss a meal they'd normally have at home?

SCENARIO: Alcohol at client dinner
POLICY: "Reasonable client entertainment"
DECISION FRAMEWORK:
- Is alcohol prohibited by policy?
- If allowed, was it excessive?
- What was the ratio to food cost?
- Context: Celebration? Normal dinner?

SCENARIO: Spouse meal at conference dinner
POLICY: Often silent
DECISION FRAMEWORK:
- Was spouse attendance expected/encouraged?
- Is this a pattern or one-time?
- Senior employee/client entertainment exception?
```

### Travel

```
TRAVEL EDGE CASES:
──────────────────

SCENARIO: Upgraded airfare without approval
POLICY: "Economy class; upgrades require approval"
DECISION FRAMEWORK:
- Why was it upgraded? (Health, last-minute, error)
- Cost difference?
- One-time vs. pattern?
- Reimburse economy equivalent?

SCENARIO: Extended stay for personal days
POLICY: "Business travel expenses only"
DECISION FRAMEWORK:
- Did adding personal days save or cost money?
- Reimburse only business portion
- Calculate airfare as if direct business trip

SCENARIO: Luxury hotel booked
POLICY: "$200/night limit"
DECISION FRAMEWORK:
- Was it the conference hotel?
- Market rates in that city?
- Was cheaper option available nearby?
- Reimburse up to limit? Or actual if justified?
```

### Equipment and Supplies

```
EQUIPMENT EDGE CASES:
─────────────────────

SCENARIO: Home office furniture
POLICY: "Reasonable home office expenses"
DECISION FRAMEWORK:
- Is employee primarily remote?
- What has company provided?
- Ergonomic/health need?
- Within annual limit?

SCENARIO: Software subscription
POLICY: "IT-approved software only"
DECISION FRAMEWORK:
- Is there an IT-approved alternative?
- Security/compliance implications?
- Business need?
- Reimburse if IT approves after the fact?

SCENARIO: Personal device for work
POLICY: "Company-provided equipment"
DECISION FRAMEWORK:
- Why was company device insufficient?
- BYOD policy exist?
- Partial reimbursement?
- Data security addressed?
```

### Entertainment and Gifts

```
ENTERTAINMENT EDGE CASES:
─────────────────────────

SCENARIO: Golf outing with client
POLICY: "Client entertainment must be reasonable"
DECISION FRAMEWORK:
- Standard industry practice?
- Value of client relationship?
- Frequency?
- Any policy prohibition?

SCENARIO: Expensive client gift
POLICY: "$100 limit per gift"
DECISION FRAMEWORK:
- Over limit, but major client/deal?
- Pre-approval obtained?
- Exceptionally justified?
- Split between participants?

SCENARIO: Team happy hour
POLICY: "$25/person for team events"
DECISION FRAMEWORK:
- Calculate per-person cost
- Alcohol reasonable portion?
- Approval obtained?
- All team invited (not exclusive)?
```

## Decision Documentation

### Approval Template

```
EXPENSE DECISION DOCUMENTATION
──────────────────────────────

Employee: _________________________
Expense Report #: _________________
Amount: $_________________________
Date Submitted: ___________________

DECISION: □ Approved □ Approved (partial) □ Denied

ANALYSIS:

1. Business Purpose: □ Yes □ No □ Partial
   Notes: _______________________________

2. Policy Compliance: □ Yes □ No □ Exception
   If exception: _______________________________

3. Reasonableness: □ Yes □ No □ Borderline
   Notes: _______________________________

If PARTIAL APPROVAL:
Original amount: $__________
Approved amount: $__________
Reason: _______________________________

If DENIED:
Reason: _______________________________
Policy reference: _______________________________
Appeal option communicated: □ Yes

Decided by: _________________ Date: _________
```

### Exception Approval

```
EXCEPTION REQUEST
─────────────────

Employee: _________________________
Expense Description: _________________________
Amount: $_________________________

POLICY EXCEPTION DETAILS:

Policy violated: _________________________
Policy limit: $_________________________
Requested amount: $_________________________

JUSTIFICATION:
_____________________________________________
_____________________________________________

SUPPORTING FACTORS:
□ One-time circumstance
□ Business necessity
□ Extenuating circumstances
□ Other: _________________________

APPROVAL CHAIN:
Manager: _________________ □ Approve □ Deny Date: _____
Director: _________________ □ Approve □ Deny Date: _____
Finance: _________________ □ Approve □ Deny Date: _____

FINAL DECISION: □ Exception Approved □ Denied
```

## Escalation Framework

### When to Escalate

| Situation | Escalate To |
|-----------|-------------|
| Over approval limit | Next approval level |
| Policy exception request | Manager + Finance |
| Potential fraud | Finance + Legal/HR |
| Pattern of abuse | HR |
| Executive expenses | CFO or Board |
| Unclear policy application | Finance for guidance |
| Employee dispute | HR |

### Fraud Red Flags

```
WATCH FOR THESE PATTERNS:
─────────────────────────

□ Expenses just under approval thresholds
□ Round dollar amounts (no receipts detail?)
□ Duplicate submissions
□ Receipts from closed businesses
□ Frequent "lost receipt" forms
□ Personal items disguised as business
□ Unusual vendors or locations
□ Expense spikes when audits are unlikely
□ Split transactions to avoid limits
□ Approved by non-manager (circumventing)
```

## Communication Templates

### Denial Communication

```
EXPENSE DENIAL COMMUNICATION
────────────────────────────

Subject: Expense Report [#] - Additional Information Needed

Hi [Name],

Thank you for submitting your expense report dated [date].

After review, the following item(s) require clarification or 
cannot be approved as submitted:

ITEM: [Description]
AMOUNT: $[Amount]
ISSUE: [Specific policy or reasonableness concern]

[Choose one:]

OPTION A - CLARIFICATION NEEDED:
Please provide additional documentation or explanation for 
this expense. Specifically: [what you need]

OPTION B - PARTIAL APPROVAL:
This expense has been approved for $[amount] based on 
[policy limit/comparable expense]. The difference of 
$[amount] is not reimbursable because [reason].

OPTION C - DENIAL:
This expense cannot be approved because [specific reason]. 
Per policy section [X], [explanation].

If you believe this decision is in error or have additional 
information, please reply to this email. You may also appeal 
to [Name/Role] within [X] days.

Questions? Contact [Name] at [email].

Regards,
[Your name]
Expense Administration
```

### Policy Reminder

```
POLICY REMINDER COMMUNICATION
─────────────────────────────

Subject: Friendly Reminder: Expense Policy

Hi [Name],

I noticed a pattern in your recent expense submissions that 
I wanted to address proactively.

[Specific observation, e.g., "Several meal expenses have been 
at or just under the $50 dinner limit."]

As a reminder, our expense policy is designed around 
reasonable business expenses, not maximum reimbursements. 
Please ensure expenses reflect actual business needs.

If you have questions about what's appropriate, feel free 
to reach out before incurring the expense.

Thanks for your attention to this.

[Name]
```

## Audit Considerations

### Documentation for Audit

```
EXPENSE AUDIT READINESS:
────────────────────────

FOR EACH EXPENSE, HAVE:
□ Original receipt
□ Business purpose statement
□ Approval evidence
□ Policy compliance verification
□ Exception documentation (if any)

MAINTAIN:
□ Consistent decision-making evidence
□ Exception log with justifications
□ Policy acknowledgment records
□ Training completion records
```

### Sampling Approach

```
REGULAR EXPENSE AUDITS:
───────────────────────

FREQUENCY: Monthly/Quarterly

SAMPLE:
□ Random sample (X% of reports)
□ All reports over $[threshold]
□ All exception approvals
□ Employees with prior issues

REVIEW FOR:
□ Receipts match claims
□ Business purpose valid
□ Approval appropriate
□ Policy compliance
□ Fraud indicators
```

## Resources

### references/
- **policy-interpretation-guide.md** — How to interpret policy gray areas
- **edge-case-decisions.md** — Precedent decisions for reference
- **fraud-detection-guide.md** — Identifying expense fraud

### scripts/
- **threshold-checker.py** — Flags expenses near limits
- **pattern-analyzer.py** — Identifies unusual expense patterns

### assets/
- **expense-policy-template.docx** — Sample expense policy
- **decision-log.xlsx** — Track adjudication decisions
- **audit-checklist.xlsx** — Expense audit workpapers