I am using v2007 with Expense Reports and Approval Routing features enabled.

With a value specified in the Expense Limit field in the Employee/Human Resource tab, when an expense report is submitted, an message:

"No one in your chain of command has a sufficient spending limit to approve this transaction"

The data specified were:
Employee Expense Limit = 1000
Supervisor is specified
Expense Approver is specified
Expense Approver Limit = 10,000
In the Expense report, only one line item with amount=100 was entered (for the employee login with Employee Center role)

Question is the 100 was smaller than the expense limit so the expense report should automatically be approved.