Expense Review

Expense Review

Perform a structured review of organizational expenses to identify trends, anomalies, policy violations, and cost reduction opportunities. This skill produces an actionable expense analysis with clear findings and recommendations.

Step 1 — Scope the Review

Define what is being reviewed and why.

Checklist

• Data extract is complete and reconciles to GL totals
• Chart of accounts / category mapping is current
• Expense policy document is available for reference
• Prior period data is available for comparison
• Any known one-time items are pre-flagged

Step 2 — Categorize and Normalize Expenses

Ensure every transaction is properly classified before analysis.

Standard Category Taxonomy

Normalization Steps

1. Reclassify any miscategorized transactions.
2. Exclude inter-company transfers and reclass entries.
3. Normalize for one-time or non-recurring items.
4. Convert foreign currency transactions to reporting currency.
5. Pro-rate partial-period items for like-for-like comparison.

Step 3 — Trend Analysis

Compare the review period against benchmarks to identify directional changes.

Period-over-Period Comparison

Key Trend Metrics

• Expense-to-Revenue Ratio: Total expenses / total revenue (target: depends on stage and industry).
• Per-Capita Spending: Total non-people expenses / headcount.
• Category Mix Shift: How the percentage allocation across categories has changed.
• Growth Rate vs. Revenue Growth: Are expenses growing faster or slower than revenue?

Step 4 — Anomaly Detection

Flag transactions and patterns that deviate from norms.

Anomaly Detection Rules

Anomaly Log Template

Step 5 — Policy Compliance Check

Validate expenses against the organization's expense policy.

Compliance Checklist

Step 6 — Cost Reduction Opportunities

Identify actionable savings based on the review findings.

Opportunity Assessment Template

Prioritization Framework

• Quick Wins: Low effort, immediate savings (< 30 days).
• Medium-Term: Moderate effort, requires negotiation or process change (30–90 days).
• Strategic: High effort, structural change needed (90+ days), but large impact.

Output Format

## Expense Review — [Scope] — [Period]

### 1. Executive Summary
- Total spend: $X (change vs. prior period)
- Key findings (3-5 bullets)
- Total identified savings opportunity: $X

### 2. Spend Overview
[Category breakdown table with trends]

### 3. Trend Analysis
[Period-over-period comparison; key ratios]

### 4. Anomalies & Exceptions
[Anomaly log with severity and resolution status]

### 5. Policy Compliance
[Compliance checklist with exception details]

### 6. Cost Reduction Recommendations
[Prioritized opportunity list with savings estimates]

### 7. Action Items
[Owner, deadline, expected outcome for each recommendation]

Quality Checklist

• Data reconciles to GL totals within $1 tolerance
• All categories are represented; no "uncategorized" bucket > 2%
• Trend comparison uses like-for-like periods (normalized for one-time items)
• Anomalies are documented with specific transaction detail
• Policy compliance findings reference specific policy sections
• Savings estimates are conservative and methodology is documented
• Every finding has a clear owner and timeline for resolution

Edge Cases