Improving the Effectiveness of Your Claims Auditing Process

Local Government Management Guide

Problem Claims

If the answer to any question posed in the earlier section (Claims Auditing) is no, then some type of action should be taken in most cases. Obviously, this will depend on the specific deficiency and the dollar amount involved. The following actions and remedies may be available to the body or official responsible for auditing claims:

  • If original documentation (such as invoices, purchase orders or receiving slips) is missing, the claim should be held until the supporting documentation is submitted. When original documentation is not provided, there may be an increased risk that the claim is not legitimate.
  • If the claim is mathematically incorrect, confirm the proper amount, correct any mistakes and only approve the claim for the corrected amount.
  • If the original invoice does not sufficiently itemize the goods purchased or services rendered, contact the official who approved the claim. The official should contact the vendor to request a more detailed claim and to educate the vendor on itemization requirements.
  • If the claim is for travel or conference expenses and the traveler cannot substantiate that charges are for actual and necessary expenses, or if charges are not properly authorized or are not in compliance with local policies, reduce the claim by the amount of ineligible expenses.
  • If the claim is a duplicate or has been partially paid before, reject the entire claim or reduce it to the unpaid amount. Be aware that the submission of photocopies of original invoices may indicate the possibility of a duplicate claim.

Claims generally may be rejected or reduced if they do not meet legal requirements, exceed available appropriations or, in the case of reimbursement to officers and employees in travel status, are not actual or necessary expenses. The course of action to be taken is sometimes a matter of judgment and will vary based on the situation. In some cases, consultation with the attorney for the local government or school district is advisable. When there is a claims auditing official, the official should periodically report to the governing board on the results of the claims auditing process so that if a problem arises that can be addressed within the powers and duties of the board, the problem and its eventual resolution can be discussed with the board.