An expense report is a form completed by employees to itemize the expenditures for which they are requesting reimbursement. Receipts are typically attached to the form if the related expenditure amounts exceed a certain minimum amount. The employer then examines the submissions for accuracy and validity, and pays employees the requested amounts. The employer can then record the reimbursed amounts as a business expense, which factors into the amount of accounting profit and taxable profit recognized.
Expense reports can also be used to detail expenditures made against an initial employee advance. If so, the employer still records the submitted amounts as a business expense, but there is no reimbursement; instead, the employer deducts the expenditures from the amount of the employee advance.
An expense report can include a number of company-specific information fields, but usually requires at least the following core information:
- Date on which an expenditure was incurred (matches the date on the related receipt)
- The nature of the expense (such as airline tickets, meals, or parking fees)
- The amount of the expense (matches the amount of the related receipt)
- The account to which the expense should be charged
- A subtotal for each type of expense
- A subtraction for any prior advances paid to the employee
- The grand total of the amount of reimbursement requested
An expense report form may also include a summary of the employer's travel and entertainment policy, which defines which expenditures will not be reimbursed by the company (such as in-room entertainment expenditures).
The expense report concept can also refer to a detailed listing of expenses incurred by each department of a company for a reporting period. This information is examined to see if any actual expenses incurred were different from expectations, in which case management can investigate the reasons for these variances.