By Anna Baumgardner, CPA | Published 09/08/2022
Organizational expenses may be paid in many ways, from direct ACHs and wires, to vendor drafts on the bank account, to debit and credit cards. Some organizational expenses are made by employees using personal funds, and are reimbursed by the organization. (See our blog on Business Credit Cards vs Employee Reimbursements for more information.) In any case, you’re probably collecting receipts for those expenses, and may be worried about how to handle missing receipts. In this article, we’ll cover why you need to keep (or start!) collecting and managing receipts, how to handle missing receipts, what should be included on a missing receipts form, and what happens if you have too many missing receipts.
Wait, do we really care about missing receipts?
You got out of your car on your way into your office or home, and the receipt for your office supplies purchase blew away with the wind. Oops! Well, do you really need to submit that receipt anyway?
Yes. Yes you do. It is important to collect and maintain documentation of financial transactions to support your books in the event of an audit – whether it be a standard financial audit, an IRS audit, or an audit performed by a grantor. We recommend attaching the documentation to your transactions in QBO to make tracking the support super easy, but if you’re using QuickBooks Desktop or another accounting software, attachment capability may not be available to you. In those cases, you’ll need a document management system or software – it can even be as simple as shared folders in a Google Drive or Microsoft Sharepoint/OneDrive. Maintaining documentation records of your transactions helps provide substance to your financials, should you ever need to support or prove your transactions’ legitimacy.
Do we really need to collect a W-9?
Along with your receipts, you should collect W-9s for all – okay most – of your service provider vendors. You do NOT need to collect W-9s for vendors from whom you only buy physical goods. Why would you need to collect W-9s? For filing 1099s! When 1099 filings are due on January 31, having the W-9s on hand will help you and your accountant/preparer quickly determine who needs a 1099 based on the formation status indicated on the W-9, and help you prepare the filings for those who do need one, using the address and EIN provided on the W-9.
How can a missing receipt be replaced?
Regardless of our best efforts, sometimes a receipt simply cannot be recovered. In these cases, we recommend setting up and using a missing receipts form. This form is submitted and attached or stored in lieu of the original receipt. If the original receipt is later recovered, the missing receipts form may be replaced by the original receipt.
There is no authoritatively-prescribed missing receipts form structure that must be followed, but we encourage you to require at a minimum these key items:
- Date of purchase
- Method of payment (identify the card, if there are multiple for the organization)
- Purchase amount
- Goods or service purchased
It also never hurts to include a line for the expense coding and class, if applicable. In cases where team members are submitting receipts (and missing receipt forms) to an accounting team, the accounting team may request information as to the expense and class coding anyway. This line, as well as a few others, is entirely optional but we have included it in our template, provided below.
What are the consequences of a missing receipt?
The ramifications for missing receipts are entirely up to the organization’s management. In instances where a missing receipts form is rarely needed, it may not be necessary to design and enforce punitive consequences. If team members become too cavalier about submitting or recovering receipts, and use missing receipts forms to support most purchases, the organization may consider restricting access to organization debit and credit cards, or denying reimbursement requests.
The link below is a blank example of a missing receipts form. You can use this as a template to create your own, and modify as is appropriate for your organization.
Still have questions? No worries! Schedule a call with us at your convenience.