Post on 19-Dec-2015
Finance Fundamentals III:
Mastering Reimbursements: Travel, Business Meals & Entertainment
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Subject Matter Experts
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Baseline Quiz
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When a traveler uses a personal car, which is not reimbursable?
A. Gas
B. Tolls
C. Mileage
D. Parking
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GasTolls
Mile
age
Parking
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What ground transportation to/from the airport is not allowable?
A. Taxis
B. Airport shuttle services
C. Sedan service
D. Public transit, such as the “T”
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Taxis
Airport
shuttle se
rvice
s
Sedan service
Public tr
ansit, s
uch as t
he...
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Travelers reimbursed at the Lodging per diem rate must provide:
A. Proof of travel
B. Reason why folio could not be obtained
C. All of the above
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Proof o
f tra
vel
Description of s
pecial c
...
All of t
he above
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If traveling domestically on federal funds, travelers should choose:
A. The cheapest airline available
B. A U.S. flag carrier regardless of price, where available
C. The carrier with the best safety record
D. The carrier that provides non-stop service
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The cheap
est air
line avai...
A U.S. fl
ag carri
er rega
rdle..
The carri
er with
the best
...
The carri
er that
provid
es...
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To document a business meal attended by multiple people, you should include:
A. The names and titles/affiliations of the attendees or readily identifiable groups
B. The business reason for the meal
C. The date of the meal
D. All of the above
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The names and title
s/affi
l...
The business
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The date of the m
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Understanding the Policies
Harvard’s Travel and Business Expense Policies:
Ensures that sound business practices are followed and that the reporting of travel, entertainment, and non-travel business expenses is in compliance with external and internal regulations
FAS follows University policy; addendum with additional guidelines
Exceptions to policy require approval in writing from FAS Associate Dean for Finance or proxy.
http://policies.fad.harvard.edu/pages/travel-0
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Regulations and Policies
Spending and reimbursement policies are determined by the following:
External Regulations – IRS Tax Regulations and Office of Management and Budget Federal Cost Regulations
University Policies
Sponsor/Donor Terms
FAS Guidelines
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University’s Accountable Plan
The University must comply with IRS “accountable plan” rules under which travel advances and reimbursements must meet following three requirements:
1. Valid business connection or purpose—expenses must directly benefit University
2. Adequate substantiation—a statement submitted within a reasonable period of time that appropriately documents amount, time, use, and business purpose
Any expenses that fail to meet these must be
treated as income.
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University Policy Restrictions
Repetitive Food expenses
Spousal/Family Meals and Travel
Use of Private Residences- Cannot claim lodging per diem- May extend appreciation to family or friends:
~ Purchase up to $75 gift per stay
Sedan Service
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University Policy Restrictions
Books, office furniture and equipment purchased with University funds are property of the University.
Purchases of home office furniture are personal expenses and will not be reimbursed
Where travel and other expenses will ultimately be paid by a third party, travelers should seek reimbursement from the third party directly.
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University Policy Restrictions
Individuals who use personal funds to make a purchase on behalf of the University CANNOT use the University’s sales or meals tax exemption. For Harvard’s sales tax exemption to be valid, Harvard must make the entire purchase directly.
Pursuant to local policies, Harvard may reimburse individuals for sales or meals tax incurred on valid University purchases.
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University Policy Additions
Payment/reimbursement for lifetime memberships are now an allowable for tenured (Senior) faculty members.
Flight cancellation insurance is now an allowable expense.
University policies will be reviewed quarterly and updated as needed.
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Airfare Restrictions for Federal Awards
Use of preferred travel agency strongly recommended; check travel.harvard.edu for list
Domestic air travel: – U.S. Flag Carriers only– Economy/coach-class ticket
International air travel:– U.S. Flag Carriers when departing from U.S. and
where available while abroad, unless other circumstances described on Federal Awards Travel Reimbursement Exception Form apply
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FAS-Specific Guidelines
FAS Meal Guidelines:– Breakfast - $20 per person, including tax & tip– Lunch - $45 per person, including tax & tip– Dinner - $100 per person, including tax & tip
– The University does not reimburse for meal expenses for one day travel of twelve hours or less
What Are Dept. Responsibilities?
Communicate policies and procedures to everyone Assign internal controls for preparation and approval of
reimbursements Decide whether to impose greater control than
University/FAS requires Train necessary staff in reimbursement policies Determine appropriateness of expense
– Does University allow reimbursement for such an expense?– Does expense primarily benefit University?– Does it conform to policies of University, FAS, and funding
agency?– Does it meet criteria set out in terms and restrictions of
account being charged?18
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5 W’s: Business Purpose
Detailed business purpose is required by IRS accountable plan:
– WHO– WHAT – WHEN – WHERE– WHY
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5 W’s: Who
● Who: includes the name of individual who incurred the expense
● Others if more than one individual was involved
● List title and affiliation for Non-Harvard individuals – up to 5 people. Otherwise include an identifiable group
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5 W’s: What & When
● What: includes a description of event, activity, or purchase ● Example: “Trip to Spider Monkey
Conference” vs. “Trip to conference”● Make sure to be very specific about which
Grant the “What” applies to
When: includes beginning and end dates of trip or date item was purchased
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5 W’s: Where & Why
● Where: includes exact location of trip ● Trips with multiple locations; list each city
● Why: provides reason expense was incurred and how it relates to the fund being charged
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What is a Per Diem?
Per diem is a daily rate assigned by federal government to a location for reimbursement of lodging, as well as meal and incidental expenses (M&IE)
Rates are on the Travel Services Website: http://www.travel.harvard.edu/cgi-bin/travel/index.php
(Effective date for per diem should agree with dates of travel)
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When to use a Per Diem
Reimbursement for travel may be based on per diems- Per diems are paid in lieu of actual expenses
- Receipts are not required; proof of travel is required
- Advance per diems are not allowed
- Applicable for employees and non-employees by exception
Lodging Per Diems- Acceptable only under special circumstances and rarely for domestic travel- Amount cannot exceed published Federal Per Diem Rate- Proof of travel required
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Claiming Per Diems
You cannot mix receipts and per diems (within the same category) in the same trip
The traveler must choose to either submit receipts or claim a per diem
Proof of travel must be supplied with the reimbursement documentation
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Prorating Per Diems
A. All 5 days since that’s where the trip originated
B. Just the first and last day
C. None
D. We don’t have enough information to know
26 All 5 si
nce th
at’s w
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.
Just
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and la
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We don’t h
ave enough
...
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A professor returns from a multi-city trip and is asking for meal per diems. He flew into and out of New York City with the remainder of the trip spent in Chicago. His reimbursement lists the NYC per diem rate for the full 5 days of his trip. For how many days should he receive the NYC per diem rate?
Prorating Per Diems
IRS regulations require prorating of meal per diems under certain circumstances:
● For trips lasting more than 12 hours but less than 24 hours, use 75% of M&IE per diem rate
● For trips lasting more than 24 hours, use 75% of M&IE rate for first and last days of trip
● For multiple-city trip, base meal per diems on flight times and lodging where traveler slept
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Documentation Requirements
All travel and purchases must be– Business expenses primarily benefiting University– Properly documented
Complete business purpose required Proper substantiation of amount by providing receipts or a
Missing Receipt Affidavit Signature of reimbursee required Signature of approver required on the MRA
Reimbursement requests must be submitted within the appropriate timeframe.
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A professor has purchased some books for research. She wants to pay for them using her department research fund. How long of a period does she have to submit her receipts for reimbursement?
A. 60 days
B. 90 days
C. Over 90 days with an approved exception request
D. Up to a year from the date of purchase
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60 days
90 days
Over 9
0 days with
an a...
Up to a year
from th
e da..
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Timeframe for Submission
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Timeframe for Submission
To satisfy IRS accountable plan, travel expense reports must arrive at Reimbursement & Card Services:
– 90 days from end date of trip or, for non-travel related expenses, date on which expense was incurred
– However it should be noted that best practice is to get receipts and reimbursement requests in as soon as possible
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Timeframe for Submission
Reimbursements become taxable– 91 to 182 days after end date of the trip/date on
which expense was incurred or if the Exception Request is denied
No payment allowed– 183 days after end date of trip or date expense
was incurred
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Exemption from Timeframe
Extended Business Trips“Trip taken by a full-time employee that is in excess of 30 consecutive days but less than one year”
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Who Is Subject to the Timeframe?
A. Faculty (junior, senior, visiting) and staff (full and part-time)
B. Preceptors, Lecturers, Teaching Assistants
C. Teaching Fellows and Research Assistants
D. Only A and B
E. All of the above
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Facu
lty (ju
nior, senior, v
is...
Precepto
rs, le
cture
rs, TA’..
Teaching F
ellows a
nd Res...
Only A and B
All of t
he above
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What Receipts Are Required?
Original receipts for all expenses of $75 or more
All hotel receipts/hotel folios
Electronic receipt requirements– Must be a receipt, not a confirmation
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What If No Receipts Are Available?
If an original receipt is lost or misplaced, use a Missing Receipt Affidavit (MRA)
For air travel or hotel stays, additional documentation is required
One MRA can support multiple expenses
Both reimbursee and approver must sign MRA
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How to Request an Exception
Exception approval allows for processing of expenses as a non-taxable reimbursement through Reimbursement & Card Services
To request policy exceptions:– Complete Exception Request Form
– Department administrator or financial officer submits completed form to finxcept@fas.harvard.edu
– Lost or misplaced receipts are not “extenuating circumstances”
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Why Are Reimbursements Returned?
Expense is unallowable under University policy Expense exceeds 90-day limit and does not have
approval from FAS Office of Finance
Expense doesn’t comply with “Fly America Act” (see OSP policies regarding travel on federally sponsored funds)
Expense is actually a third-party payment Incorrect per diem rate is used Not approved by approver in the system When returned, it will have a “green sheet” attached.
Keep this and return with resubmission
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Resources
FAS Office of Finance: www.finance.fas.harvard.edu
Administrative Systems Assistance Program (ASAP): fasasap@fas.harvard.edu; (617) 496-7136
Reimbursement & Card Services: www.travel.harvard.edu
- Listing of Harvard negotiated rates- Mileage, exchange, and per diem rates- Travel agency partners, etc.
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Other Resources
FAS Office of Research Administration Services: www.fas.harvard.edu/~research
Reimbursement and Card Services, (617) 495-7760
http://oc.finance.harvard.edu/services/reimbursement-and-card-services