How to wrap up financial loose ends after an employee leaves

There is much to think about when employees leave your employment, including hiring and training the new employee and divvying up duties in the meantime. Human resources might refer to this as “offboarding.” You might have someone complete a checklist to ensure departing employees return items like ID badges, building keys, cell phones or computers.

Internal audits from governments around the country identify a few additional areas that local governments commonly overlook when employees leave. We mention them in various best practice resources, but we thought you might find it helpful to see highlights in one blog post. Below are several financial areas you should review when an employee leaves.

Key financial areas to review

Credit card programs

Historically, governments used to issue credit cards to a handful of people, usually upper management. In recent years, some governments have implemented procurement card programs and have therefore issued several credit cards to employees at all levels, and across many departments. Large programs increase the risk that someone might leave without returning their credit card.

As mentioned in our resource, Best practices for credit card programs (PDF), you will want to ensure separated employees do not have active cards. Therefore, if you have a credit card program, make sure you have a process in place for someone “in the know” to notify the credit card administrator of any expected or known employee separations. That way, the administrator can deactivate the card and obtain support for any charges that occurred before the employee’s last day.  

Travel advances

Some governments allow travel advances, so that employees have money to cover travel costs. This requires “settling up” upon returning, in which the employee submits an expense report and related receipts. The employer deducts the advance from the remaining balance owed to the employee.  

As described in our resource, Best practices for travel and reimbursable expenses (PDF), you will want to ensure employees “settle up” before you or they terminate employment. If you provide travel advances, you should:

• Have a process in place to check for any outstanding travel advances issued to departing employees
• Resolve these before you issue the employee’s final paycheck. (Consult your policy as to whether local governments can withhold a travel advance from wages. Labor and industries provide some guidance on allowable payroll deductions. State agencies can deduct the travel advance from the final paycheck per the state’s accounting manual.)

Fueling system access

A government might issue fuel cards for commercial fueling stations or provide access to their own fueling system. They might issue fuel cards or keys to each vehicle, but they also may assign access to certain people. As described in our resource, Best practices for fueling government-owned vehicles (PDF), you will want to ensure separated employees do not have access to your fueling system.

If applicable to your local government, you should have a process in place for someone “in the know” to notify the fueling system administrator of any pending employee separations. They should review transaction history and obtain any support before the employee’s last day, as well as terminate access.

Financial authority and oversight

Banking

Consider whether departing employees are signers on any bank or investment accounts – you’ll want to remove them before their last day. Also, as advised in our Best practices for bank reconciliations (PDF) resource, you should also perform an annual review of all open bank or investment accounts and verify the authorized signers. But this is only one of several annual reviews you should perform.