CAPA CAPA Expense Management 2 — Questions and Answers
Question 1: What is the primary purpose of expense management software in an AP department?
- To generate vendor invoices automatically
- To automate expense report submission, approval, and reimbursement (Correct answer)
- To track customer billing
- To manage payroll deductions
Correct answer: To automate expense report submission, approval, and reimbursement
Expense management software automates the workflow of submitting, approving, and reimbursing employee expenses, reducing errors and processing time.
Question 2: Which IRS form is used to report non-employee compensation of $600 or more?
- W-2
- 1099-NEC (Correct answer)
- W-9
- 1040
Correct answer: 1099-NEC
The 1099-NEC (Non-Employee Compensation) form must be filed with the IRS and provided to independent contractors paid $600 or more in a calendar year.
Question 3: Under IRS substantiation rules, what four elements must be documented for a business expense deduction?
- Amount, vendor name, payment method, and approver
- Amount, date, business purpose, and business relationship (Correct answer)
- Date, GL code, department, and approver
- Receipt, amount, vendor address, and tax ID
Correct answer: Amount, date, business purpose, and business relationship
IRS rules require documentation showing the amount, date, business purpose, and business relationship of persons involved to substantiate a business expense deduction.
Question 4: What type of expense fraud occurs when an employee submits the same receipt for reimbursement twice?
- Padding
- Duplicate submission (Correct answer)
- Personal expense misclassification
- Inflated reimbursement
Correct answer: Duplicate submission
Submitting the same receipt more than once to collect double reimbursement is a duplicate submission, a common form of expense fraud flagged by expense management systems.
Question 5: What is the purpose of a Travel and Entertainment (T&E) policy?
- A vendor payment schedule
- Written guidelines governing employee spending on travel, meals, and entertainment (Correct answer)
- A corporate event planning document
- An employee benefits handbook
Correct answer: Written guidelines governing employee spending on travel, meals, and entertainment
A T&E policy establishes company rules for allowable travel and entertainment expenses, spending limits, and the process for submitting and receiving reimbursement.
Question 6: Which analytical control best detects unusually high or anomalous expense submissions?
- Vendor master validation
- Statistical analysis and benchmarking of expense patterns (Correct answer)
- Three-way invoice matching
- Payment terms review
Correct answer: Statistical analysis and benchmarking of expense patterns
Analyzing expense reports statistically and comparing them against peer benchmarks helps identify outlier submissions that may indicate errors, policy violations, or fraud.
CAPA CAPA Expense Management 2
What is the primary purpose of expense management software in an AP department?