How do unreimbursed expenses affect financial control?
The Audit Guidelines suggest that almost any true independent contractor will incur some expenses that are not reimbursed by the recipient of his or her services. Even the fictional Sam Spade, who worked for $10 a day plus expenses, was not reimbursed for the rent of his office, the salary paid to his secretary, or his phone bill. Other expenses an independent contractor might incur would include tools, advertising, licenses, insurance, postage, repairs, supplies, equipment rental, travel, depreciation, and inventory costs. By contrast, employees generally do not incur such expenses or are entitled to reimbursement for them. Auditors are instructed generally to ignore expenses that are reimbursed by the service recipient. [Audit Guidelines, p 2-18.] Likewise, the guidelines note that relatively minor expenses (e.g. parking and commuting costs) do not indicate independent contractor status. Additionally, if it is common in an industry for an employee to pay significant expenses (such as
