Managing Expenses

The Expense Authorization system is a commonly used method to keep track of and control expenses. It is based upon the use of tickets. These tickets are written authorizations prepared for each expense. With this system, before a check is written, a ticket is prepared authorizing payment. This system provides an excellent control over expenses. It does this by making sure that each expense is justified and by requiring more than one person to be responsible for preparing and authorizing the payment. A ticket is prepared for every transaction that results in an expense. When an invoice for a purchase is received, it is attached to a ticket, which is then filled out and signed. The information that goes on the front side of the ticket verifies the information on the invoice. Once the information is verified, an approval signature is required to authorize the expense. Once the ticket is approved, it is recorded in an expense register.

Tickets are recorded in the register in date order. Once recorded, the ticket is put into an Unpaid Ticket File where it remains until it is paid. The tickets are filed according to the date they should be paid in order to take advantage of discounts. When it comes time to pay a ticket, it is removed from the Unpaid Tickets File and a check is issued. The check number and payment date is recorded on the ticket and in the Ticket Register next to that ticket entry. Each ticket is paid by check. As each ticket is paid, the payment is recorded in a Check Register. With the ticket system, the Check Register is the book of original entry for recording payments and it takes the place of a cash payments journal.

In a computerized accounting system, the function for controlling expenses is controlled by the Accounts Payable program. You would enter, track and pay your invoices with Accounts Payable.