What is required to ensure sufficiency of documentation for an expenditure?

• A. Ensure each cost has justification, source documentation, timekeeping, and approval.
• B. Obtain approval only before charging the cost.
• C. Retain receipts for at least one year without additional details.
• D. Use general ledger entry as sufficient documentation.

Answer: (A)

Full, auditable expenditure documentation requires a clear business justification, the original source documentation (like invoices, receipts, or contracts) that substantiates the amount, timekeeping records for labor to accurately allocate charges, and the appropriate approvals showing the cost was authorized. This combination creates a traceable trail from the initial request to the payment, showing why the cost is allowable and how it was allocated to the project. Without any one of these elements, the expenditure isn’t fully verifiable: justification explains the need, source docs prove what was actually incurred, timekeeping ensures labor is charged correctly, and approvals demonstrate proper authorization.

If you only have one aspect, such as just an approval, you miss the concrete evidence of what was purchased or the labor that was billed. Relying solely on receipts without linking them to a project or without timekeeping and approval leaves gaps in accountability. A general ledger entry alone also lacks the underlying source documents and the specific justification needed to show why the cost is appropriate and allowable.