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Enterprise Business Process

and Data Modeling for the

Roadmap for Financial and

Administrative Policies,

Processes, Systems and Data

State of Washington

Sponsored by:

Department of General Administration

Department of Information Services

Department of Personnel

Office of Financial Management

Expense Reimbursement Value

Proposition

Version 0.9

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Table of Contents

1

Document Overview

... 3

1.1 Related Documents ...3 1.2 Approvals ...3 1.3 Summary of Changes...3 1.4 Distribution ...3

1.5 Document Control Information ...3

2

Introduction

... 3

3

As-Is Expense Reimbursement Business Models

... 3

3.1 Travel - Expense Reimbursement As-Is Process ...3

3.2 Travel – Expense Reimbursement As-Is Components ...3

3.3 Travel - Assumptions on Common Process & Agency Variations ...3

3.4 Other Expenses - Expense Reimbursement As-Is Process ...3

3.5 Other Expenses – Expense Reimbursement As-Is Components...3

3.6 Other Expenses - Assumptions on Common Process & Agency Variations ...3

4

Could-Be Modeling- Best Practice Research

... 3

5

Could-Be Expense Reimbursement Business Models

... 3

5.1 Could-Be Model for Expense Reimbursement – Travel and Other ...3

5.2 Expense Reimbursement Could-Be Process Narrative...3

5.3 Could-Be Expense Reimbursement Components...3

6

Business Case, Value Propositions and Proposed Policy Changes ... 3

6.1 Business Challenge ...3

6.2 Proposed Solutions, Expected Value and Performance Measures ...3

6.3 Proposed Policy Revision Recommendations ...3

6.4 Proposed Candidates for Enterprise Data Standards...3

7

Conclusion

... 3

8

Next Steps and Lessons Learned

... 3

9

Appendix I - Best Practice References

... 3

10

Appendix II – Travel FY 2003 -2005 Data All Agencies... 3

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1.1 Related

Documents

This document is a consolidated view of the following phase 1 deliverables:

• The current state (as-is) model for expense reimbursement accounting;

• The recommended (could-be) common process model for expense reimbursement accounting;

• Documentation of agency-unique variances for expense reimbursement accounting;

• High-level data models for the recommended common process model for expense reimbursement accounting;

• Policy revisions to support the recommended common process model for expense reimbursement accounting; and

• The business case and value proposition (including key performance indicators) for expense reimbursement accounting.

This document should be used in conjunction with the following documents:

• Enterprise Business Process and Data Modeling for the Roadmap Project Charter;

• Enterprise Business Process and Data Modeling for the Roadmap Communication Plan; and

• Enterprise Business Process and Data Modeling for the Roadmap Modeling Approach.

1.2 Approvals

This document requires review and approval. This document was approved by:

Name Organization Date

Kathy Rosmond OFM

1.3 Summary

of

Changes

This section records the history of changes to this document. Only the most significant changes are described here.

Version

Date

Author

Description of Change

0.1 10/11/05 C. Connors Original

0.2 10/19/05 C. Connors Updates per initial review with Project Team. 0.3 10/25/05 C. Connors Extensive updates from Project Team

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0.6 11/2/2005 S. Dodson Inserted new Policy Proposal 1 Updated modelling process workflow

Added Appendix 2 to acknowledge focus group members

0.7 11/3/2005 S. Dodson Updated for feedback from 3rd focus group session

0.8 11/10/2005 C. Connors •Finalized candidate data elements and added draft ERD as an appendix.

•Updated current expense amounts after reconciliation of AFRS and CAFRS.

• Added placeholder for Performance Measure recommendations.

0.9 11/15/2005 C. Connors •Updated for feedback from Melissa and Kathy

Where significant changes are made to this document, the version number will be incremented by 1.0. Where changes are made for clarity and reading ease only and no change is made to the meaning or intention of this document, the version number will be increased by 0.1.

1.4 Distribution

This document has been distributed to

Name

Organization

Date of Issue

Version

Kathy Rosmond OFM

Susan Dodson OFM

Michelle French OFM

Ron Carrigan OFM

Colleen Connors Eclipse Solutions Robin Madsen Eclipse Solutions John Natteford Eclipse Solutions David Rudawitz Eclipse Solutions Larry Tenison Eclipse Solutions Working Team

members

Roadmap Working Team 10/26/2005 V .04

Focus Group members Expense Reimbursement Focus Group

11/2/2005 V .05

OFM TEMS Team 11/2/2005 V .05

Julie Boyer & Kathleen Nolte

Sterling Associates 11/3/2005 V .06

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Published on Roadmap website

11/10/2005 V.08

Melissa Cook & Working Team

OFM, Eclipse Solutions, MA Cook & Associates

11/17/05 V.09

1.5

Document Control Information

At the end of this document is a labeled box indicating the end of text as shown below. Enterprise Business Process and Data

Modeling for the Roadmap END OF DOCUMENT

Any copies found to be incomplete or obsolete should be destroyed under supervision or returned to the owner.

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2 Introduction

The purpose of this Expense Reimbursement Modeling Pilot Results, Business Case, and Value Proposition document is to consolidate and finalize the results of phase 1 of the Enterprise Business Process and Data Modeling for the Roadmap for Financial and Administrative Policies, Processes, Systems and Data project. It serves as a summary of the effort completed for phase 1 and, most importantly, makes a business case for and communicates the value of implementing the recommended common best practice processes and data models.

The Modeling Pilot Results, Business Case, and Value Proposition for Phase 1 – Expense Reimbursement includes:

• As-Is (current state) Business Model Legend and Components;

• Travel – Expense Reimbursement As-Is (current state) Business Model

• Other Expenses – Expense Reimbursement As-Is (current state) Business Model • Common Processes and Agency Unique Variations

• Best Practice Research Summary

• Could-Be (recommended process) Business Model Legend and Components • Could-Be (recommended process) Expense Reimbursement Business Model • High Level Data Model

• Business Case/Value Proposition

• Proposed Policy Revision Recommendations

The definition and scope of phase 1, expense reimbursement accounting, is the process of reimbursing employees, appointees, volunteers, and prospective employees for necessary and reasonable expenses such as travel, tuition, moving, and other miscellaneous work-related expenses, from pre-approvals through payment. The process also includes requesting, paying and tracking advances when advances are necessary and allowed.

The business objectives of the expense reimbursement process are:

1. Authorize reimbursable travel and expense as a part of program delivery activities for various individuals as required;

2. Reimburse authorized, work-related expenses incurred by various individuals; 3. Make and collect on advances to employees when necessary and allowed;

4. Report travel and other reimbursed expenses at the appropriate level for management and accountability; and

5. Enable pre and/or post audit of compliance with state and agency policies for reimbursed travel and expenses.

Currently there is wide disparity among the processes agencies use to manage travel and non-travel expense claims presented by employees. State employees and other non-travelers complete paper or automated travel claim forms and submit original receipts. A separate paper form is required to claim reimbursement for non-travel expenses. Supervisors review and approve the claims. Accounting staff then verify the eligibility of expenses and accuracy of claims. Finally, approved claims are processed for reimbursement. This process is time consuming and has a

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spending. This information would be beneficial for individual agencies and the state as a whole to support budgeting, controlling expenses, and negotiating supplier contracts.

This report documents the as-is process, proposes a could-be process, and documents policy changes that may be necessary for the implementation of the proposed process. It also provides analysis to begin to quantify the benefits of implementing the significant changes proposed in the could-be business model.

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3 As-Is

Expense

Reimbursement Business Models

The project team worked with an extended group of agency experts1 to model the as-is business processes. The express purpose of the as-is focus group session was to document what agencies do and why in the area of expense reimbursement accounting. The team reached agreement on common business objectives and modeled current processes. They also identified the following key process issues:

• Although agencies comply with travel and expense reimbursement policies in the State Administrative and Accounting Manual (SAAM), there are extensive agency variations at every step of the process;

• Except for one or two unique practices required by collective bargaining agreements, agencies attributed their policy and process variations entirely to “customary practices” that have evolved over time. Focus group members were not aware of any laws or regulations that required agency-unique expense reimbursement practices.

• Agencies follow separate processes for travel and other reimbursements, although they are very similar;

• Manual process and work-arounds are common, especially for trip planning, pre-authorizations, advance tracking, and non-travel expense reimbursement processes;

• Time-consuming management and payment review and approval processes for pre-authorization, vouchers, and receipts; and

• Minimal enterprise data, for example how much travel expense is reimbursed, which hotels get the state’s business, and the types and amounts of non-travel expenses reimbursed to employees.

The following components were developed to illustrate the existing processes for travel and other expense reimbursements:

• Business process model – a diagram representing the as-is process for expense reimbursement;

• Component list of the business process model – this is a list of the Roles, Inputs, Outputs, Events, Data and Constraints included in the model; and

• Common process & agency variations – these narratives supplement the process flows by providing additional information on common processes and samples of known agency variations.

The business process models display the current agency business processes without regard to supporting technologies. However, the statewide Travel Voucher System (TVS) is available to all state agencies for preparation, approval, and payment of travel reimbursement requests. The system is accessed through the state Intranet and provides electronic tools to the traveler/preparer, the manager, and fiscal staff. TVS is currently used by 20 agencies and available to 30,000 employees. TVS does not support trip planning, pre-authorization, or

1

The following agencies were represented in all three expense reimbursement focus group meetings: the Departments of Community Trade and Economic Development, Corrections, General Administration, Labor and Industries, Revenue, Social and Health Services, and Transportation, the Washington State Patrol, and the Office of Financial Management. The State Auditor’s Office and the State Treasurer’s

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agencies including the Washington State Patrol and the Department of Revenue also operate agency travel voucher systems for their employees.

These symbols are used on the business process model diagrams:

Constraint

Input or Output

Event

Blue text: Possible areas of agency variations Role May Include Directional Flow Note

Roadmap Business Process Model Legend

General flow of events Electronic Data Connector High Value Output

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3.1 Travel - Expense Reimbursement As-Is Process

Required For:

Out of State or out of country Exceptions to maximum lodging rate Travel Advance

Other situations vary by agency

Verify receipts if attached and

Verify pre-approvals, if they were required

If no activity within X days Agency

Requirement? Filed to meet SAAM 10.280.20

Paid by Agency:

Airfare, registrationspool/ rental car

Paid by Traveler: Lodging, POV

What about Lodging credit cards? Pre-Approval Request Incur Expenses Tickets, reservations, POV, other Advance Request Reimbursement Payment Training Request Advance Payment Voucher Receipts Request Pre-Approval Authorize Travel and/ or Advance

Post & Pay Advance (If advance was requested) Voucher Expenses Post Voucher Payment & Excess Advance (if any) Approve Voucher (or timesheet) Data on Taxable benefits (to Payroll) Remittance for Excess Advance A/R or Expenditure entry A/P Entry State Travel Policies & Rates (SAAM) State Procurement Policies Federal Tax Rules Plan Trip

If Expenditure, make AR entry for outstanding advance at FY End

EFT or Warrant Split off taxable expenses Approve payment Monitor Advance Balance EFT or Warrant Required Approvals, itinerary, mode(s) of travel Repayment plan or payroll deduction Employee Bargaining Agreements State Contracts Agency Policies Internal Controls Co ns tra ints Input s Ou tp uts E ven t Flow State Laws (RCWs)

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Roles Inputs Outputs Events Data Constraints • Board member • Commission member • Council member • Employee • Student • Fiscal office • Payroll office • Program Manager/supervisor • Approver • Travel coordinator • Voucher Preparer/designee • Volunteer • Prospective employee • Employee of other agencies (e.g. admin law judges) • Pre-approval request • Training request • Other evidence of pre-approval (e.g. Job description or work plan that includes blanket travel authorization) • Advance request • Travel voucher • Receipts/documentati on/proof of payment • Conferences, training agenda, invitation • Remittance for excess advance • Timesheet for POV

mileage, and paid through payroll (unique to one collective bargaining agreement)

• A/P expenditure entry • A/R entry

• Advance payment • Audit details

• Payroll deduction for excess advance repayment • Reimbursement

payment

• Taxable benefits data to payroll

• Copy of voucher to payroll for payment of taxable portions • Training approval • Travel approval Plan Trip • Plan trip • Request pre-approval • Request travel advance • Request training • Authorize travel • Authorize advance • Authorize training • Post & pay advance Incur Expense • Procure transportation • Procure training registration • Employee incurs reimbursable expense Post Expense Processing • Voucher expenses • Remit excess advance • Approve voucher • Approve payment • Post voucher payment • Post excess advance • Monitor advance

balance

Travel Information • Account codes • Dates and times • Employee expenses • Location

• Purpose of trip • Shared vehicle • Travel mode • Airline ticket number • Car rental invoice

number • Mileage

Employee Information • Official station • Official residence • Scheduled work hours • Vendor ID

• Approver/ Supervisor Advance information • Transactions • Advance balance

Agency Paid Expenses 2

Laws

• Revised Code of Washington (RCWs)

• Federal tax rules (e.g. (taxable fringe benefits, 120 days to file for reimbursement) Policies

• State travel policies & rates (SAAM) • State procurement • Agency travel • Agency procurement • Internal controls Other • State contracts (e.g. airfare, lodging, rental cars, etc.) • Employee bargaining agreements (for special per diem, mileage)

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3.3 Travel - Assumptions on Common Process & Agency Variations

Very few policies and processes are common across all agencies represented in the focus group, and no enterprise travel system is used by all state agencies. Many processes are manual, with extensive agency variations for each of the process. 3

Event Common Across Agencies Sample Agency Variations

In General • Agencies comply with state travel policies in SAAM • Agencies generally pay the

maximum reimbursement rates allowed for lodging, per diem, and POV mileage

• More restrictive agency travel policies • Lower rates for lodging in some locations

• May not increase POV or lodging rates when SAAM allows increase

• Agency reserves the right to negotiate travel allowances with employees (e.g. in cases where employee combines business trip with personal travel)

• Agency may or may not enforce strict adherence to state contracts Plan trip • Agencies encourage use of

Motor Pool cars instead of POVs, when appropriate

How trips are planned:

• Administrative assistants plan trips • Employees plan their own trips • Supervisor/manager may plan trips

• Use of a Travel Calculator is required to determine whether to use Motor Pool or POV • For use of POV for trips over 60 miles one way, agency Mileage Reimbursement Form is

required to document why an agency-owned vehicle was not used

3

Except for one or two unique practices required by collective bargaining agreements, agencies attributed their policy and process variations entirely to “customary practices” that have evolved over time. Focus group members were not aware of any laws or regulations that required agency-unique expense reimbursement practices.

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Request pre-approval

• Pre-approval is always specifically required for:

• Out of state travel • Out of country travel • Exceptions to maximum

lodging rate • Travel advances

• Governor or Governing Board approval is required for travel outside of the continental USA, Alaska, and British Columbia

Acceptable approval methods:

• Form 40-A Travel Authorization form • Agency unique authorization form • Approval through automated system

• Blanket approval in job descriptions or work plan • Email or oral supervisor approval

• Manager signature on travel voucher is acceptable evidence of pre-approval Situations requiring pre-approval

• Air travel requires pre-approval • ALL travel requires pre-approval • Overnight travel requires pre-approval

• Board/commission member travel requires pre-approval • Training registration

Focus group agencies required 1 to 7 levels of approval depending on circumstances Authorize

advance

• Advances cannot be issued for POV mileage

Advances are issued to:

• Only employees but not board/commissioner members • Employees, Board/commission members

When advances can be granted: • Travel costs (except POV)

• Occasionally for miscellaneous expense, if allowed by statute/law • Not for miscellaneous travel expenses

• Tuition

• Only to infrequent travelers who do not have a state issued travel card How advances are approved:

• Integrated with pre-approval process • Stand alone paper process

• Advances over $1000 require Assistant Director approval Acceptable approval form:

• Form 40-A Authorization form • Agency unique form

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Event Common Across Agencies Sample Agency Variations

Post & Pay advance

• Advances are issued thru the agency’s account payable system

Advance payments are processed: • Centrally

• Regionally

How Advances are accounted for:

• Posted as a debit to GL 1383: Travel Advances • Posted as a debit to some other receivable GL

• Posted as expenditure debit, with adjusting entry to set up receivable at end of fiscal year Incur

Expenses

• Traveler pays for hotel, meals, and incidentals with cash or personal credit card • GA Contract provides credit

cards options

http://www.ga.wa.gov/pca/cont ract/04298c.doc

Agency credit card policies:

• Most travelers use state cards for most expenses • Employee corporate card is commonly used for hotels • A few travelers use state cards for a few expenses • Travel cards are issued only to frequent travelers

• A travel card is issued if an employee requests 3 or more advances over 6 months

• A combination of individual corporate travel cards and direct billing are used for lodging and rental vehicles

• Agency pays for most rental cars by Direct Bill from contract vendor • State cards are not issued to travelers

• Agency charges airfare and Amtrak to a default account code on a ghost card; no physical card is issued

• Agency pays for rental cars with corporate travel card Travel arrangements are made by:

• Agency or division travel coordinator • Whichever administrative assistant is handy • Travel coordinators for all air travel

• The traveler for their own travel

• The traveler for all of their own travel except for air travel

How travel arrangers are notified of the trip details so they can make arrangements: • Traveler makes personal contact with arranger

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Voucher Expenses

• Receipts are maintained at some official location for possible post-audit

Acceptable vouchering methods: • Form A20-A Travel Voucher form • Agency unique travel voucher form • Automated system

• Timesheet for POV mileage, paid through payroll (required by one collective bargaining agreement)

Timing of voucher submission: • Require monthly vouchers

• Would like monthly vouchers, but will accept more frequently • Can submit partial month if expenses exceed $200

• Submit vouchers at least quarterly but not more often than monthly. • Can submit twice a month if over $250

Agency policy on late vouchers: • No deadline for late vouchers • Will refuse to pay if 90 days or older When receipts are required:

• All lodging

• Expenses over a dollar amount, from $0 to $50 • All coffee/light refreshment

• All non-travel expenses

• Not required if original signature on A-19 How receipts are filed:

• Traveler retains • Supervisor retains • Preparer retains

• Attached to voucher, retained by Fiscal • Other central/division location retains

How travel expenses charged to a state credit card are handled:

• Lodging and/or meals charged to a state card are listed separately on voucher • Lodging and/or meals charged to a state card are not listed on the voucher • Expenses charged to individual travel cards are not listed on the voucher

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Event Common Across Agencies Sample Agency Variations

Account Coding

• None identified When account coding is added to voucher: • Employee completes full account coding • Employee completes some account coding • Employee leaves account coding blank • Supervisor adds or corrects account coding • Fiscal adds or corrects account coding • Account coding defaults from somewhere

• Process for adding coding varies by division within the agency Approve

Voucher (program)

• Supervisor approval is always required

How are vouchers approved:

• Always approved, even if pre-authorized trip

• Pre-approval confirmation statement is required on the voucher • Supervisor verifies required pre-approvals

• Supervisor verifies required receipts

• Receipts sometimes not reviewed (just kept on file)

• Either Fiscal, the Approver, or a certified prepared verifies receipts

• An agency Receipts Matrix directs staff in various divisions what to do with receipts Approve

Payment (Fiscal)

• Fiscal approval is always required

How payment is approved:

• Always approved, even if pre-authorized trip • Fiscal verifies required pre-approvals • Fiscal verifies required receipts

• Receipts are not reviewed (just kept on file) How payment is given to employee:

• Through petty cash & handed to employee • Mailed to employee

• Returned to division and given to employee • Varies by division within agency

• If employee has payroll EFT, they are required to accept travel EFT payment Split off

Taxable expenses

• Taxable portions of reimbursements such as excess meal reimbursement are tracked and reported to payroll.

How taxable amounts are accounted for?

• Taxable amounts pulled off and paid through payroll

• Taxable amounts paid with voucher, then reported monthly to payroll

• Taxable amounts paid with voucher, then reported to payroll each payroll cutoff (15th & 30th) • Process varies by region within the agency

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Post Voucher Payment & Excess Advance (if any)

• Agencies reimburse travel through their accounts payable system (AP)

None identified.

Monitor advance balance

• Advances to employees are tracked

• Excess advances are collected

How advance balances are tracked: • Paper files

• Excel spreadsheet

• Advances charged to special object, then tracked through the GL • Agency system tracks balances

How are excess advances recaptured:

• Voucher is not processed until excess advance is returned

• Any excess advance is garnished from payroll as a deduction or with a payment plan • Depending on frequency of travel, excess advance may be deducted from future vouchers • Employee is asked to deliver amount to Accounts Payable. Agency will accommodate a

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3.4 Other Expenses - Expense Reimbursement As-Is Process

Verify receipts if attached and Verify pre-approvals, if they were required If no activity within X days Pre-Approval Request Incur Planned Expenses Advance Request Reimbursement Payment Advance Payment Voucher Receipts Request Pre-Approval Authorize Expenditure and/or Advance

Post & Pay Advance (If advance was requested) Voucher Expenses Post Voucher Payment & Excess Advance (if any) Approve Voucher (or timesheet) Data on Taxable benefits (to Payroll) Remittance for Excess Advance A/R or Expenditure entry A/P Entry State Procurement Policies

If Expenditure, make AR entry for outstanding advance at FY End EFT or Warrant Split off taxable expenses Approve payment Monitor Advance Balance EFT or Warrant Repayment plan or payroll deduction Internal

Controls Federal Tax Rules

Incur Unplanned/

Field Expense

OR

-eg: Excess tuition Excess moving Multilevel approval for some Approval of pre-approved sometimes skipped Agency

Policies Contracts State

Employee Bargaining Agreements C o nstraints In pu ts O u tp u ts E ve nt Fl ow State Laws (RCWs)

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3.5 Other Expenses – Expense Reimbursement As-Is Components

Roles Inputs Outputs Events Data Constraints

• Board member • Commission member • Employee • Fiscal office • Payroll office • Program Manager/ supervisor • Approver • Voucher Preparer/designee • Volunteer • Pre-approval request • Tuition request • Advance request • Other evidence of pre-approval (e.g. job description, purchasing authority, work plan) • A19 Invoice Voucher • Receipts/document ation/proof of payment • Advance payment • A/P entry • A/R entry • Audit details • Management information • Reimbursement payment • Taxable benefits data to payroll • Copy of voucher to payroll for payment of taxable portions Plan Expense • Request pre-approval • Request Advance • Request training • Authorize expenditure • Authorize advance Incur Expense • Employee incurs reimbursable expense Post-Expense Processing • Voucher the expense • Approve voucher • Approve payment • Split off taxable

expenses

• Post voucher payment • Monitor advance balance Expenditure Information • Account coding • Dates • Employee expenses Employee Information • Vendor ID Advance information • Transactions • Advance balance Laws • Revised Code of Washington (RCWs)

• Federal tax rules (e.g. (taxable fringe benefits, 120 days to file for reimbursement) Policies • Agency procurement • State procurement Other • State contracts • Employee bargaining agreements • Internal controls

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3.6 Other Expenses - Assumptions on Common Process & Agency Variations

Similar to the travel expense reimbursement, other expense reimbursements have few common processes and extensive agency process variations.

Event Common Across Agencies Sample Agency Variations

Other

expenses (non-travel)

An A19 voucher is typically required to claim reimbursement for other expenses

Some agencies issue advances for: • Light refreshments

• Tuition

• Never give advance for other expenses General:

• May allow employee to claim some non-travel expenses on travel voucher (e.g. light refreshments)

• Require specific pre-approval for all non-travel expenses • Assume approval if within employee’s purchasing authority

• If supervisor approves voucher, assume that expense was properly approved • Always require receipt or proof of payment, regardless of amount

• Receipt not required if A19 voucher statement has an original signature

• Agency will accept signed A19-1A (instead of 2A) form only if the receipt was damaged Rules for tuition reimbursement:

• Always require written pre-approval for any training

• Always require written pre-approval for tuition for outside courses

• Employee pays tuition, then is reimbursed by agency only after they successfully complete the course

• Some agencies pay tuition directly to student, and then require repayment if no pass • Dollar caps on tuition that can be reimbursed

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4 Could-Be Modeling- Best Practice Research

In order to recommend common business processes and data standards that leverage the best thinking of specialists in this functional area, the project team researched best practices, as well as the capabilities of commercially available software. Research included reviewing other state solutions for financial and administrative business transformation, industry standard (Gartner, Aberdeen, etc) research, and evaluating industry standard expense management automation (EMA) software solutions.

Generally best practices point to the following:

Establish and enforce a single spending policy - Controlling indirect expenses is a very important strategy for improving the financial health of an organization;

Centralize management of expenses – Centralization at an enterprise level can create hard dollar savings as well as process improvements;

Act on the data collected – Analyzing data can help companies understand and correct complex business problems, such as analyzing motor pool use and possibly relocating pools to meet user needs;

Leverage Supplier Management - Requiring employees to use contracted vendors and analyzing aggregated data to negotiate with suppliers provides significant opportunities to cut costs;

Collect costs through credit cards - Mandating use of corporate credit cards increases insight into and control over expenses, minimizes the need for out-of-pocket expenditures and advances, and offers the opportunity for credit rebate incentives; and

Use enterprise technology - Adopting an enterprise technology solution enables efficient collection of enterprise data and enforcement of business policies.

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5 Could-Be Expense Reimbursement Business Models

Using the information gained from the as-is processes and the best practice research the project team worked with the same extended group of agency experts to model the could-be business process for expense reimbursement. Generally, the could-be focus group and the project teams were open to significant change and agreed that the future state process should:

• Encompass the entire end-to-end expense reimbursement process from initial planning through payment;

• Combine travel and other reimbursements into a single process;

• Reduce proliferation of agency-unique policies and processes;

• Use state credit cards for most expenses to capture details on expenditures and help eliminate the need for advances;

• Electronically feed credit transactions directly into employee vouchers;

• Reimburse through payroll, rather than AFRS (when HRMS is ready to take this on, at some point in the future);

• Approve by exception, based on business rules and statistical sampling; and

• Collect data needed to make better decisions and drive results.

Based on the as-is modeling the team understands “what” the state does and “why”. The team agreed on a could-be model that encompasses all of these features and incorporates industry trends into a standard, efficient and effective process. In recognition of the enormous

challenges of implementing the significant change proposed, the model is labeled as a “Vision in Progress”.

The following components illustrate the could-be process for expense reimbursements and include:

• Business process model – a diagram representing the could-be processes for expense reimbursement;

• Process narrative to highlight the proposed process modifications; and

• Component list of the business process model – the Roles, Inputs, Outputs, Events, Data, and Constraints included in the model.

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Constraint

Input or Output

Event

Blue text: Possible areas of agency variations Role May Include Directional Flow Note

Roadmap Business Process Model Legend

General flow of events Electronic Data Connector High Value Output

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The following briefly describes the features of the above Could-Be Model for Expense Reimbursement - Travel and Other.

Establish Spending Authority Profile

Establish Spending Authority Profile – A spending authority profile is created for any person who is expected to incur expenses as part of their job duties. Depending on the frequency of need for reimbursements, these people are issued a central bill corporate procurement, travel or combined credit card. They may also be issued an employee billed travel card to cover out of pocket meal expenses until these costs can be reimbursed at per diem rates. The card information is included in the profile. The profile also includes information such as agency ID, default account codes, the person’s delegated purchase authority, approved purchase allowances/limits for specific categories such as POV mileage, parking, light refreshments, training, supplies, and other materials required for the

employee’s work. Expenditures (either planned or field) that fall within the employee’s spending profile are eligible for an expedited approval. Ideally, the Spending Authority Profile would interface with the credit card administrative process so card assignment details can be administered in a single location.

Approve (Spending Authority) Profile – The Spending Authority Profile must be approved before taking effect. Once approved, expenses and trips can be planned and reimbursable expenses submitted.

Plan Expense Option

Plan Expense – The ability to plan travel and other expenses in detail extends the opportunity to manage and automate the process. Whether initiated by the traveler/purchaser or a surrogate travel planner (i.e. administrator) the planning process considers the Spending Authority Profile of the traveler/purchaser. It provides a place to check flight and lodging availability, make tentative reservations, and collect the total cost of a trip. These include: 1) estimated cash expenses such as POV mileage, parking, and meals calculated at per diem rates, 2) agency expenses not paid by credit card such as pool cars, 3) agency expenses paid by credit card such as conference registration, airfare, and rental car, and, 4) expenses paid by employee’s central bill credit card such as lodging . Alternatively, the employee can initiate a request for a non-travel purchase, perhaps by selecting the item(s) from on-line catalogs provided by the state’s vendors.4

Business rules in the planning process enable the system to encourage or enforce the use of state contracts where they are available. Account codes would default from the Profile and can be updated as appropriate.

Pre-Approve Expense –The pre-approval process would consider: 1) the purchaser/traveler’s Spending Authority Profile, 2) travel rules related to the destination (out of state/out of country), 3) off-contract purchase exceptions, and 4) the approval path which in turn

considers a) the agency’s approval hierarchy, b) the approver’s delegated authorization limits, c) any account code specific business rules. Once the expense is approved, reservations for airfare, cars, and lodging are confirmed, or alternatively an order is transmitted to a vendor.

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Unplanned Expense Option

Identify Need for Emergency/Field Expense – Implementing an efficient and effective planning process will improve the likelihood that expenses are planned. However, the need for emergency/field purchases will still arise. This process skips the planning process and goes directly to the purchase event.

Incur Expense

Agency Incurs Non-Credit Travel Expense – An agency non-credit travel expense is an expense incurred by the agency for travel that cannot be paid by credit card such as GA pool car charges. These costs are included in this business process to accurately collect the cost of a “trip”.

Agency Incurs Corporate or Ghost Card Expense – An agency corporate or ghost card expense might include air, hotel, rental car, conference admission, etc. These costs are included in this business process to accurately collect the cost of a “trip”.

Person Incurs Central Bill Individual Card Expense – Data about Travel and non-travel, planned and non-planned expenses made by authorized persons is fed directly from the credit card company into the voucher expenses process. The traveler/purchaser is able to create a trip or expense event and select the credit card charges and agency-paid charges to assign to the charge event.

Person Incurs Out-of-pocket Expense – Personal out-of-pocket expense includes travel and non-travel, planned and non-planned expenses such as POV mileage, meals, taxi costs, bus fare, etc. Except for meals, which will automatically be calculated at per diem rates, the traveler/purchaser must add the data for out-of-pocket expenses manually during the voucher expenses process.

Post-Expense Processing

Assign agency costs to person & reconcile credit invoice – Credit card provider transactions on corporate and ghost card charges are fed into the “Assign agency costs to person & reconcile credit invoice” process based as much as possible, on the planning data collected in the Plan Expense process. Non-credit card expenses, such as the GA pool cars, will come in via a data feed from that system. Account codes are automatically provided by the spending plan for all charges that successfully match a planned expense (by vendor, date, and dollar amount). The corporate credit cardholders assign the transactions to the appropriate individuals who can validate receipt and complete account coding as needed in the voucher expenses process.

Separately, the invoices for the corporate credit cards and GA Motor Pool are paid when due, using central billing account codes. The expenses are reallocated from the central account codes to the detailed account coding in approved vouchers.

Voucher Expense – Periodically, each person allocates all credit expenses assigned to them, plus out of pocket expenses other than meal costs, to expense or trip events. Meal allowances are calculated automatically at per diem rates. Other planned expenses are automatically assigned to the trip but might require verification by the traveler that the automatic match was valid. Defaulted account coding is updated if necessary and any unusual circumstances are justified (for example any miscellaneous expense over $75 might need itemization and hotel charges might need itemization of room rates and taxes). Travelers provide paper receipts to be reviewed and filed according to state policy, where electronic credit receipts do not meet Federal tax requirements.

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the voucher is selected at random for approval. Cost allocation entries are created for approved vouchers to reallocate credit card expenses from central bill codes to the voucher codes. Cumulative charges by account code are tracked so credit card rebates can be credited against the actual account codes when received.

Pay any taxable and non-taxable amounts due – Since a corporate credit card will be used for most expenditures the amount, frequency and urgency of reimbursement payments is decreased. For employees, the output from the authorize expense process is a data feed to payroll for inclusion with the employee’s electronic payroll payment. For non-employees, the data would probably feed to accounts payable for electronic payment to the vendor.

Act on enterprise travel and procurement information – Detailed travel and expense information will be analyzed to support strategic sourcing decisions, plan programs, and improve service delivery.

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5.3

Could-Be Expense Reimbursement Components

Roles Inputs Outputs Events Constraints

• Board member • Commission member • Council member • Employee • Student • Fiscal office • Payroll office • Program Manager/supervisor • Travel coordinator • Voucher Preparer/designee • Volunteer • Prospective employee • Employee of other

agencies (e.g. admin law judges)

• Spending authority profile

• Expense Plan • Credit card feed

• Agency/ghost card feed • Receipts/documentation/

proof of payment • Agency business rules

Travel & Procurement Information

• Vendor detail

• Program travel spending • Commodity detail Itinerary Items • Airline ticket • Car reservation • Conference room reservation • Lodging reservation • Training/conference registration Other Outputs

• Taxable and non-taxable amount due data to payroll

• Accounting entry for payroll payment • Accounting entry to

reallocate agency and credit card paid items and to actual program and vendor

Establish Spending Authority Profile • Create profile • Approve profile Plan Expense or Trip • Plan trip or expense • Request training • Pre-approve expense Incur Expense • Procure transportation • Procure training registration • Employee incurs reimbursable expense Post Expense Processing • Voucher expenses from

credit card feed • Approve voucher • Authorize expense Pay Any Amounts Due • Pay taxable amounts • Pay non-taxable

amounts

Laws

• Revised Code of Washington (RCWs) • Federal tax rules (e.g.

(taxable fringe benefits, 120 days to file for reimbursement) Policies

• State travel policies & rates (SAAM)

• State procurement • Agency policies • Internal controls Other

• State contracts (e.g. airfare, lodging, rental cars, etc.)

• Employee bargaining agreements

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6

Business Case, Value Propositions and Proposed Policy Changes

This section presents the challenges identified with current (as-is) expense reimbursement practices and processes. In addition, it specifically identifies the major proposed changes included in the could-be model and the anticipated value associated with each change. (The project team derived these value propositions based on the information currently available through statewide financial reporting and industry research.) A third subsection delineates the policy changes that may be necessary to support the implementation of the could-be model.

6.1 Business Challenge

Through evaluation of the existing processes for expense reimbursement, identification of agency variances, and best practice research, the project team found the State of Washington faces business challenges similar to other public and private organizations of its size. The specific challenges are:

• Disparate policies, practices, and enforcement approaches among agencies and even among divisions within large agencies;

• Limited or no aggregated travel expense and supplier data, except for air travel and rental cars;

• Very little actionable information about travel patterns and trends to support program planning and service delivery;

• Time intensive and manual processes, especially for trip planning, pre-authorizations, advance tracking, and reimbursement of non-travel expenses; and

• Inconsistent payment practices, ranging from advances to individuals, to individually billed credit cards, and to centrally billed credit cards.

The team also noted that although the majority of agencies use the statewide Travel Voucher System (TVS), the state lacks an enterprise technology solution to support the entire end-to-end business process.

Industry standards assume processing costs of approximately $48 per voucher when using a manual process. 5 The majority of vouchers are currently processed through TVS, which automates part of the reimbursement process. Therefore, we assume a current cost of $36 per voucher for the approximately 135,000 vouchers processed by Washington State agencies (other than higher education) per year. This equates to an approximate annual total processing cost of $4.8 million. Washington agencies (other than higher education) currently reimburse roughly $27 million annually in subsistence and lodging costs.6 Streamlined processing, an automated expense management system, and increased data visibility could reduce these costs.

5

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6.2 Proposed Solutions, Expected Value and Performance Measures

The could-be model includes the following significant proposed changes and related value: 1. Streamline existing business processes

Eliminating variant agency processes saves time and ultimately costs for individuals, agencies, and the state.

2. Implement a centralized expense management solution with automated trip planning and reimbursement.

Industry experts assert that average improvement for travel and expense (T&E) reimbursement processing costs after expense management automation is 40-60%7. Assuming the low end of this range is applicable to the State of Washington (as the state does already have some automation), this translates to a possible $1.9 million (40% of $4.8 million) in annual efficiencies, redeploying employees, managers, and reassigning administrative staff to higher value work.

A variety of automated expense management solutions are available in the private and public sector marketplace today. The core features include, but are not limited to, trip planning services, travel funding information, ability to respond to ad hoc reporting requests, credit card data feed automation, workflow automation, and edit checks that compare the employee’s spending authority profile and pre-approved expenses to the expenses they are claiming (to flag items for further review). In addition to cost savings, automation increases visibility of spending data that increases negotiation leverage and decreases fraud through automated and random audit processes.

3. Mandate the use of state credit cards for miscellaneous travel and other expenses The existing purchasing policy allows for state cards, but does not require their use for expenses other than air travel arrangements.8 By making the state cards more readily available to traveling and purchasing employees, the state can eliminate advances and increase insight into spending trends and possible vendor contract opportunities.

There is also an opportunity to reap additional benefits through the credit card rebate programs. The rebate is dependent upon contract terms, total spend amount, prompt payments, number of cards and average dollars spent per card. Today the contracted annual rebate is approximately .5-.8% of total costs charged. Assuming 60% of total annual subsistence & lodging costs would be spent on a corporate card, the potential rebate amount for travel costs is at least $130,000 to $200,000 annually.

4. Mandate use of contracted vendors, where possible

Encouraging use of contracted vendors and motor pool vehicles is considered a best practice as it minimizes exception processing, ensures agencies receive contract prices and benefits, and increases contract volumes and supplier intelligence to improve future negotiation potential and motor pool locations. The majority of automated expense management systems allow for integration and customization of preferred vendors for trip planning, making it easier for employees to make better spending decisions and ultimately reducing total expenses.

7

Fairbrother, Lori, “Expense Management – is Automation the Answer?”, GTnews.com the Treasury and Finance Network, April 18, 2005

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savings and more strategic business relationships. Industry experts indicate a possible 7% overall travel budget reduction.9 Although, the state has existing contracts for airfare, the estimated annual lodging expenditures are $16 million (60% of the $27 million subsistence & lodging costs per SAAM per diem rates), equating to a potential savings of $1.1million per year.10 Contract negotiations based on an analysis of existing spend patterns (e.g. hotels used by employees and lodging locations), is a critical success factor for achieving these savings

6. Improve service delivery based on data analysis

When data collection is increased, program managers have a rich store of data about travel details, trends, and patterns. When analyzed this data could be used to inform decisions such as where regional offices should be sited for best customer service, whether an office should be closed, the least cost location for cross-regional meetings, optimal utilization of motor pool vehicles, and various other strategies for reducing the need for travel and minimizing travel costs. Agency travel management will expand from a cost tracking and risk avoidance program into a key window into business information that impacts larger service delivery performance initiatives.

Based on the descriptions and assumptions identified above, the overall potential annual value of these changes is $1.9 million in efficiencies and $1.1 million of cost savings, plus improved service delivery. Before being considered conclusive, the analysis of potential value must include a clearer picture of at least the following:

1. Current State of Washington purchasing practices across agencies, for example use of statewide contracts;

2. The rebates earned through existing centralized purchasing;

3. How expense reimbursement integrates with the could-be model for overall vendor management, supply chain management, and payables accounting; and

4. The difference between existing processing costs and could-be model processing costs using the selected support tool(s) and contracting changes.

Performance measures used to validate and justify these savings are:

• Reduce the cost of processing an expense reimbursement by 20% in the first year and up to 40% in the second year of an automated planning and reimbursement system.11 There is a two-year realization of full savings due implementation time and adoption through all agencies.

• Reduce the cost of an overall trip expenses by 5-7% within two years (realization of savings after data collection and contract negotiations within first year) based on the renegotiation of contracts as a result of improved data analysis of travel patterns.12

9

Degnan, Christa M., August 2005

10

Travel FY 2003 -2005 All Agencies.xls spreadsheet provided by OFM Statewide Accounting.

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• Increase rebate amount to 80% of industry standards after contract renegotiation and process changes are implemented.

• Reduce the cost of lodging by 5-7% within two years (realization of savings after data collection and contract negotiations within first year) by analyzing data on costs incurred and re-contracting with vendors.13

• Achieve 80% of motor pool use where optimal within two years.

• Eliminate travel advances except in exceptional cases within two years.

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The following policy revisions are recommended to support the could-be model. These recommendations are intended as a starting point for discussion rather than definitive policy language. Additional research and extensive stakeholder involvement will be required to establish the feasibility of each recommendation, recommend detailed policy revision language, and support an executive level decision to move forward.

1. Recommendation – Establish travel and expense reimbursement “best practice” business policies and processes at state level

Current Policy • SAAM 10.10.10(b) allows agencies to adopt internal travel policies and reimbursement allowances

that are more restrictive than those contained in SAAM.

Problems With Current Policy

• The as-is models revealed extensive agency variations at every step of the current expense reimbursement processes. These agency policy and process variations:

o Are expensive for agencies to adopt and administer.

o Are confusing for employees.

o Result in increased training costs (e.g. each agency must develop unique training materials rather than being able to use standard training materials, and retrain transferred employees).

o Require extensive and costly customizations (or custom system development) in the technology and tools that support the complex processes and policies.

Benefits • Ensure agency adoption of the best business practices identified at the state level.

• Faster, better, cheaper business processes statewide.

• Reduce agency training and administrative costs.

• Treat all employees the same.

• Make it cost-effective to provide enterprise technology and tools to support standard processes and enforce compliance with state policies.

Impacts & Concerns • May increase travel costs for some agencies that currently pay less than state travel policy allows.

• Additional impacts need to be determined.

Legalities To be identified.

Implementation Strategy

• Research legalities, impacts, and concerns.

• Collect stakeholder input.

• Propose detailed RCW and policy changes.

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2. Recommendation –

a) Require use of centrally billed individual charge cards for most travel-related expenses, including but not limited to lodging, rental automobiles, and other miscellaneous expenses except meals.

b) Eliminate advances to employees.

c) Offer employees the option of also carrying individual billed charge cards for meal costs. 14

Current Policy • State policy (SAAM 10.10.45) requires agencies to use state charge cards for air travel and allows

their use for payment to other common carriers. SAAM also allows agencies to issue charge cards to employees for their travel costs and other state purchases.

• Charge card policies vary widely by agency.

• SAAM 10.10.45(a) requires employees to have primary liability for state travel cards issued to them; typically, the employee vouchers the expense, the state pays the employee, then the employee pays the charge card company.

• SAAM 10.80.60 allows agencies to make a travel expense advance to defray some costs the traveler may incur while traveling on official state business away from the official station or residence, and lays out restrictions and administrative requirements.

Problems With Current Policy

• Lodging and miscellaneous travel expenses are reimbursed directly to employees, with no enterprise visibility into vendor and commodity details that would identify strategic sourcing opportunities.

• Employees may not pay credit card bills in time for the state to earn rebate incentives.

• Many agencies continue to purchase by expensive, traditional methods rather than using the state charge card program effectively.

• Advances are expensive to process and administer.

Benefits • Enhance SmartBuy program by providing detailed visibility into amounts spent for lodging and other

purchases currently reimbursed to employees.

• Lower lodging costs (once state SmartBuy contracts are negotiated and enforced).

• Increase state charge card rebate revenues.

• Eliminate administrative costs associated with requesting, approving, issuing, tracking, and collecting on travel advances to employees.

14

Allowing employees to charge the actual cost of meals on central bill charge cards, then reimbursing the meals at per diem rates could raise questions about whether the difference between the actual costs and per diem rates are taxable income to employees. This is why the proposal is to issue a separate individual bill card for meal costs for employees not willing or able to cover their travel meal costs until they can be reimbursed.

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a) Require use of centrally billed individual charge cards for most travel-related expenses, including but not limited to lodging, rental automobiles, and other miscellaneous expenses except meals.

b) Eliminate advances to employees.

c) Offer employees the option of also carrying individual billed charge cards for meal costs. 14

• Employees using state charge cards are eligible for travel insurance benefits such as coverage for lost luggage, emergency evacuation, and theft (per state charge card contract 04298)

Impacts & Concerns • Annual fee of $0 to $50 for each additional card issued, depending on annual dollars charged (current

contract charges $0 fee for over $750 charged per year).

• Need to balance cash flow impact with potential for increased prompt payment rebate revenues (e.g. enterprise guidelines on frequency and timing of credit card payments).

• Need to determine correct accounting treatment for rebate incentive payments (e.g. revenue or recovery of expenditure).

• Employees may not pay individual bill charges in time to earn rebate incentives and avoid penalties.

o To minimize this and reduce administrative burdens on employees, the state could consider deducting amounts due on individual bill charge cards from amounts reimbursable to employees, and paying the credit card provider directly. Employee would then be responsible for paying the remaining balance, if any.

• Employees may resist requirement to carry and use state credit cards:

o May lose rebate incentives they currently receive for state expenses on personal credit cards.

o May be concerned about potential impact on their personal credit rating.

• Risk management must be effective:

o Prevent issuance of cards to high-risk employees.

o Limit employee purchase types and amounts as appropriate.

o Monitor card usage and take corrective action as necessary.

o Ensure timely payment of employee charges.

• Agencies need tools for efficient administration of cards and payment of charges (e.g. card set-up, assignment of account codes to transactions, payment of invoices, reconciliation with statements).

• Additional impacts need to be determined.

Legalities To be identified.

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2. Recommendation –

a) Require use of centrally billed individual charge cards for most travel-related expenses, including but not limited to lodging, rental automobiles, and other miscellaneous expenses except meals.

b) Eliminate advances to employees.

c) Offer employees the option of also carrying individual billed charge cards for meal costs. 14

Strategy o Revision to SAAM 10.10.45 requiring expanded use of credit card for employee initiated

expenses, with appropriate controls.

• Collect stakeholder input.

• Renegotiate existing credit card program to the extent practical to support the new policies, including:

o Expand card controls to limit usage by Standard Industry Code/Merchant Category Code.

o Expand reporting of purchase details.

o Integrate administrative features with state enterprise payable and travel voucher systems.

o More frequent receipt of incentive payments so agencies can recover the rebates against current year expenditures.15

o More favorable terms for occasional, low volume cards.

• Implement an enterprise credit card administrative and clearing process for efficient review, account coding, and payment of credit card invoices that is integrated to state enterprise systems.

• Develop and implement a communication plan and training strategy.

15

Statewide Accounting policy requires rebates received after the state fiscal year to which they apply to be recorded as revenue instead of credits against expenditures.

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3. Recommendation - Select expense reimbursement vouchers for management approval.

Current Policy Most agencies review all travel voucher calculations and supporting documentation for both regular and

infrequent travelers, regardless of the amount claimed.

Problems With Current Policy

• Expensive approach that does not consider risk levels.

• With so much volume to review, each voucher may receive only cursory attention.

Benefits • Statistical sampling, combined with business rules designed to target problem vouchers, would

provide reasonable assurance of compliance with state policy and maintain high degree of integrity.

• Reduces administrative costs to review and approve vouchers.

Impacts & Concerns • Needs to be refined as necessary to meet State Auditors Office standards.

• Other impacts to be determined.

Legalities To be determined.

Implementation Strategy

• Research legalities, impacts, and concerns.

• Collect stakeholder input.

• Propose detailed RCW and policy changes.

• Implement enterprise systems that support spending authority profiles and approval workflow based on business rules.

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4. Recommendation - Require receipts only where required by Federal tax laws, file receipts at decentralized locations, and standardize receipt requirements across agencies.

Current Policy Receipts are currently required for all lodging expenses, all other travel-related expenses over $50, and

generally for all non-travel purchases. SAAM 10.280.20 allows decentralized filing of receipts. Receipt policies vary by agency and even by division within large agencies.

Problems With Current Policy

• Places high administrative burden on employees, managers, and fiscal staff to retain, review, and file paper receipts.

• With so much volume to review, each receipt may receive only cursory attention.

• Lack of consistency in requirements for receipts is confusing for employees and auditors.

Benefits • Removing the requirement to collect, review, and file small dollar receipts reduces workload and

eliminates unnecessary paper.

• Decentralized receipt filing policy enables agencies to expedite processing of reimbursement vouchers.

• Electronic credit card receipts include rich details on purchases from Level 3 vendors, that is much more accessible for audit than paper receipts.

• Tying the state policy to federal tax rules ensures consistent compliance without having to change state policy.

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Impacts & Concerns • Risk management must be effective:

o Retention policies must be clear to ensure required receipts are on file when needed for audit.

o Need reasonable assurance that items purchased are necessary and reasonable business expenses.

o Requires compensating controls where appropriate (e.g. verification of purchase by supervisor or second employee).

• Other impacts to be determined.

Legalities • Federal Tax laws require receipts for travel related expenses when16:

o Any expense over $75 where the nature of the expense is not clear on the face of the electronic credit card receipt.

o All lodging expenses for which the credit card company does not provide an electronic listing of expenses itemized by the merchant (itemization must contain the name, location, and date of the expenditures and separate amounts for each charge, such as lodging, meals, and telephone).

o Any expenses paid for by the employee without using the business credit card (from the Section 1.274-5(c)(2)(iii) law citation, it appears this means expenses over $75).

• State laws need to be researched.

Implementation Strategy

• Research legalities, impacts, and concerns.

• Collect stakeholder input.

• Propose detailed RCW and policy changes.

• Develop and implement a communication plan and training strategy, including training on how to determine when electronic receipt has sufficient detail to meet Federal requirements.

16

Department of the Treasury, Internal Revenue Service, 26 CFR Parts 1 and 602 [TD 8864] RIN 1545-AV87; 1545-AT97: Substantiation of Business Expenses

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5. Recommendation - Limit approvals needed to three levels.

Current Policy Several levels of approval may be required before travel vouchers are finally approved for payment. The

number of levels varies by agency, anywhere from 1 up to 7 possible approvers.

Problems With Current Policy

• Additional levels of approval are expensive and probably do not add value to the process.

Benefits • Decreases time to approve and plan travel.

• Reduced administrative costs to move the request through the approval process.

Impacts & Concerns • Possibly places budgetary responsibility at a lower level than is customary in some agencies.

• Other impacts to be determined.

Legalities To be determined.

Implementation Strategy

• Research legalities, impacts, and concerns.

• Collect stakeholder input.

• Propose detailed RCW and policy changes.

• Implement enterprise system with workflow functionality.

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6. Recommendation- Reimburse meals on first and last days of travel at a standard, flat 75% of per diem rate per IRS rules.

Current Policy SAAM 10.40.50 - When may a traveler be reimbursed for meal costs?

(a) Overnight travel assignments, the agency-determined meal periods are used to determine when a traveler is entitled to a meal.

SAAM 10.40.10(c) When it becomes necessary to determine the amount to reimburse for individual meals (from the daily meals rate), use the following calculations rounded to the nearest dollar:

• The breakfast portion is 25% of the set daily meal entitlement.

• The lunch portion is 30% of the set daily meal entitlement.

• The dinner portion is 45% of the set daily meal entitlement.

However, statistical data accumulated by federal agencies shows that the vast majority of travelers receive three quarters (three-fourths) meal reimbursement on the first and last days of travel. The IRS recognize three-fourths of per diem reimbursement as “deemed substantiated” for tax purposes.

Problems With Current Policy

• Complex rules administered on an agency-by-agency basis are confusing to employees and managers, and difficult to support through an enterprise technology solution.

• Requires the employee to record departure and arrival times, and complex calculations based on that data and agency meal periods to determine eligibility.

Benefits • Reduce data requirements necessary to effect payment and the number of data elements gathered by

travelers and retained in automated systems.

• Reimbursing meals on a flat rate greatly simplifies system calculations and data requirements.

• GSA research showed that the vast majority of claims for first and last day of travel were actually reimbursed at 75% of per diem rates.17

Impacts & Concerns To be determined.

17

Improving Travel Management Government-Wide, December 1995, GSA Joint Financial Management Improvement Program (JFMIP) report, page 10

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6. Recommendation- Reimburse meals on first and last days of travel at a standard, flat 75% of per diem rate per IRS rules.

Legalities • Internal Revenue Bulletin: 2003-45, dated 11/10/2003, Section 6.01.04(1) states: “The rate may be

prorated using the method prescribed by the Federal Travel Regulations. Currently the Federal Travel Regulations allow three-fourths of the applicable federal M&IE rate for each partial day during which the employee or self-employed individual is traveling away from home in connection with the performance of services as an emp

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