What is a Mileage Log Audit?
At its simplest, a mileage log audit is a thorough analysis of drivers’ logs to search for discrepancies in date, location, purpose, miles travelled, and more. Discrepancies and inadequate recordkeeping can indicate any number of problems, most of them involving fraud or negligence—and most of them costing you money. Of course, a mileage log audit isn’t something solely for dishonest drivers to fear, either—inadequate logs can result in back taxes, fines, and various other penalties when the auditor works for the IRS or an insurance company instead of you.
Why You Should Care
When you claim a tax incentive, when you pay a mileage reimbursement, or when you deal with your insurance company, you do so with the understanding that the information you’ve collected from your drivers is accurate—that you’re paying appropriate reimbursement, that your tax claims will withstand an audit, that your insurance company won’t be able to avoid a payout if something goes wrong. Poor logs, never audited, can undermine every aspect of your business directly and indirectly.
If your logs remain entirely or primarily manually entered, they’re in perhaps the easiest situation for logs to become inaccurate, deliberately, accidentally, or negligently. They’re also far less useful in terms of data crunching for improved efficiency, due to inconsistencies, the inability to parse the data en masse, and general inaccessibility. If you’re utilizing modern solutions to collect and collate logs, your biggest concern becomes quality of the hardware and software you’re using and consistent maintenance or updates of said solution. Whatever the situation, don’t become complacent or make assumptions about the quality of your logging system unless you’ve tested it recently with a mileage log audit, as so many as half of all corporate mileage logs are in a state that would be inadequate for an IRS inspection.
Benefits of Good Logs
There are reasons to run your own mileage log audit and keep up quality logs beyond the obvious protection from exterior audits; the data collected by a modern log solution can provide valuable insight into your transportation logistics, open up avenues of negotiation with your insurance providers and other business partners, and suggest inefficiencies to eliminate or opportunities to seize. Good logs also cut down on administration costs, allow for nuanced approaches to vehicle and driver reimbursement, and more. Data is a powerful tool, and good logs can only improve your company’s efficiency in the long run.
Assessing and Improving
There are a few moves to assess and improve your logging system. Begin by randomly selecting a number of your drivers for a mileage log audit. Such testing can quickly make clear the extent and nature of any issues in your existing logging system. Once you know what problems require solutions, you can begin investigating proper solutions. Automated systems for logging, alternative reimbursement schemes requiring less paperwork, and myriad other solutions may present themselves once you know the issues your business vehicle program faces.
Would you like to know more?
Whether you’re looking for consultation on the results of a test mileage log audit, or would like the assistance of an outside group in completing such an audit and assessing the results, CarData can help. Contact us today to discuss your situation with one of our experts, or find out more in our learning center.