Vendor Expense Reports for Insurance Audits from QuickBooks Online – Part 1

This article deals with creating a report that shows your vendor or subcontractor expenses, in summary form, for an insurance audit, from your QuickBooks Online software.

Typically for workers compensation and other related liability insurance reasons, the insurance company will ask for financial reports such as:

• Income Statement (P&L)
• Subcontractor or Vendors Expenses report
• Payroll Summary Report
• Copies of previous payroll tax filings

If your books are up to date, then obtaining payroll reports and tax filing copies and the Profit & Loss statement (Income Statement) is typically no big deal.

The conundrum can be obtaining a clean report that shows your vendor or subcontractors expenses within a certain time period. The main potential problems can be the following:

1. Lots of vendors listed on this report that have no bearing on your insurance audit. Example: restaurants, gas stations and departments stores don’t belong on this report for insurance purposes.
2. The vendor field is sometimes not filled in on some your expense transactions in QuickBooks. So you will get a line item titled “Not Specified” in your Vendor Expenses Report.
3. If you are capitalizing some (or most) of your vendor expenses (Example: Spec home builders don’t recognize vendor labor and materials costs until the home sells), then you will have to manually force QuickBooks, via the customization filter function, to include vendor costs that might be in the Works-In-Progress, or Construction-In-Progress balance sheet asset accounts.

For this blog for now, let’s take a closer look only at items 1 & 2 above. I will delve into item number 3 above in a future blog as this can be a bit complicated to create this report that includes data from balance sheet accounts.

So, to get started on the Vendor Expenses Report in QuickBooks Online:

1. Go to your Standard Reports function in this software
2. Within the Search bar, type in “Expenses by Vendor Summary” and open this report.
3. I like to “Switch to Classic View” as I can see things better in a report. This link is at the top.
4. Set your report time frame dates per the audit period in question.
5. Most likely you will need to set your Accounting Method to Cash Based, so be sure the Accounting Method is set correctly here (you may need to verify with your insurance company first but typically these reports will be Cash Based).
6. Click on Run Report
7. Review your vendors listed here and scroll to the bottom for a possible vendor name called “Not Specified.” You will need to click on this Not Specified amount to see exactly where this is all coming from, but overall be sure you did not miss entering in vendor names that you might need for this report.
8. Go back into the main summary report and download to a spreadsheet.
9. Within this spreadsheet, you can probably delete any vendor name line items that will not be needed here.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.