Expense Auditing for Educational Institutions
Bridge is a financial tool for designed for educational institutions that connects budgeting and expensing, as well as provides financial guidance and alerts, using automation and machine learning.
The project brief was to optimize an expensing auditing process. We worked primarily with a project manager at California College of the Arts; and since this project was sponsored by Oracle, we also worked with the guidance of a mentor over the course of the project.
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What is the current expensing process?
Sponsored classes and projects are amazing opportunities for students to learn and produce relevant work; however, expensing is a cumbersome, tedious process that inevitably comes hand in hand. We began this project by looking at the experiences of CCA students. It was clear that the process wasn't pleasant because of:
1. Confusing business terms on the expense report form
2. Lack of knowledge around precisely what and how much can be expensed
3. The stress of waiting for their money to be reimbursed
Below is an image of what creating an expense report looks like:
Defining the problem space
To better understand the expensing process, we spoke with a project manager and two accountants. We also sent out a survey to project managers and elicited 3 responses. We created a service blueprint and a key actor relationship map to understand how the entire system works.
The service blueprint revealed to us the journey of the expense report as it travels back and forth between different parties, and the reasons for this tedious process.
Through the key actor relationship map - which told us who is involved in each step of the process and their levels of understanding for the expensing process - we identified that the project manager (PM) is heavily involved throughout the entire budgeting and expensing process, not only in auditing but also in determining the use of the budget in a class or project.
As a result of this finding and our time constraints for this project, we decided to focus on improving the PM's experience.
The Project Manager's frustrations
By being involved in the majority of the process, the project manager experiences key pain points at many areas in the entire journey. After our primary research and mapping out the project manager's journey, we uncovered a couple key areas of frustration they experience in the expense auditing process.
All our research led to this biggest insight:
The budgeting and expensing systems are separate,
leading to confusion about expensing and tedious work.
Project managers need to manually review expense reports, track the updates over time, and cross-check fields. There is a lot of back and forth communication between students and the PM to ensure all data is correct for reimbursement.
The complete disconnect between the budgeting and expensing processes also means that project managers need to keep track of the budget using non business-standard practices, or what they call "shadow-budgeting". They keep track of the budget on a separate spreadsheet tool of their choice, and this needs to be manually updated as the expense reports are being approved.
How might we bridge the gap between budgeting and expensing?
With this opportunity statement, we set forth designing. Our initial ideas included:
1. Managing and viewing the budget plan
2. Creating expense report templates
3. Tracking report statuses
4. Interfaces that "translate" information and business terms to different audiences
5. An automated system that cross checks expense reports and updates the budget plan
After sharing our ideas with our mentor and project manager, we received two key pieces of feedback that would guide us in our final direction:
Show how the system provides suggestions based on previous behaviours.
Show how the budget is driven by expense reports.
1. Incorporating the budgeting plan in the expense auditing process
On the dashboard, the auditor can see an overview of the budget spending and breakdown of the categories, which automatically updates as expenses are processed and approved. They can also see expense reports that require special attention.
In this example of a flagged negative expense report, the system explains why the auditor should be cautious. Hovering over the tags will provide more details for the warning, so that the auditor can understand the context and reasoning behind the flagging, before making a decision. The auditor can select "show me more like this", or "ignore suggestion", to train the system to make smarter decisions for future flagging.
Bridge also identifies unusual expense reports that could actually be approved - "positive" expense reports - and makes this call using information that is previously provided to the system by the auditor (e.g. being trained overtime, anticipated encumbered activities and memos).
An expense report can have two outcomes:
1. Rejected - the system generates an evaluation of the reasons for why the report is invalid, and sends it back to the student for them to re-submit.
2. Approved - the report will move forward to the next step of the process (in the case of CCA, to an accountant and then the reimbursement will be issued to the student by accounts payable).
By using budgeting information in the expense auditing process, it is easier for auditors to:
1. Recognize and act on reports that require special attention,
2. Make better decisions with the budget based on suggestions, and
3. Teach the system to make smarter decisions when they choose to either take the suggestions or ignore them.
2. Reflecting the expenses in the budgeting plan overtime
Bridge will automatically update the budget overview overtime as the budget is burned and expenses are processed and approved. Bridge will also provide suggestions for using the budget to its maximum potential, based on previous project data and auditor decisions.
The auditor can view the budget in different ways on under the "Budget" section, and Bridge uses all this data to flag and provide suggestions. These include individual limits, category spending, monthly spending, and encumbered costs for activities.
In the "Encumbered Costs for Activities" section, the auditor can add activities with estimated dates and encumbered costs so that Bridge will anticipate specific expense reports (e.g. the positive report example above) that would otherwise be considered unusual.
By reflecting expenses in the budgeting plan over time, it is possible for auditors to:
1. Have a clearer, higher-level understanding of how the budget is being used,
2. Make better overall use of the budget based on system suggestions, and
3. Give the system information that could help it anticipate certain types of expenses or expensing periods.
What were the trust principles we designed with?
1. Alignment - surfacing valuable information that is helpful and easy to understand.
2. Transparency - showing clear evidence when providing suggestions so that the user can make informed decisions.
3. Control - being able to manage the system and allow it to learn from user's actions to inform future decisions.
I found this project extremely valuable in learning the potential of automation to completely rethink workflows. Our initial ideas focused primarily on optimizing specific steps in the process without drastically creating systematic changes; however, from feedback and suggestions, we learned to use automation to rethink the entire underlying structure of the system as opposed to simply "one-upping" what already exists.
Another major learning for me was how to explain a complex enterprise problem and the work we created to address it through storytelling. Throughout the presentations and critiques in the class (including our own project), I observed both successes and struggles in communicating work clearly. I learned that a clear narrative with focused content is crucial for keeping people engaged and following the work. It's easy to show all the diagrams, notes, sketches, and whatever other artifacts were created in the process, but it easily becomes distracting and overwhelming - less is way harder, and truly more!
Overall, this project was a wonderful learning experience for an interesting problem. I am especially thankful for my professor Apurva and the opportunity to work with Oracle - more specifically, with our mentor Kelly - to create and learn so much in 5 weeks.