Finance Fundamentals III: Mastering Reimbursements : Travel, Business Meals & Entertainment.

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Finance Fundamentals III: Mastering Reimbursements: Travel, Business Meals & Entertainment

Transcript of Finance Fundamentals III: Mastering Reimbursements : Travel, Business Meals & Entertainment.

Page 1: Finance Fundamentals III: Mastering Reimbursements : Travel, Business Meals & Entertainment.

Finance Fundamentals III:

Mastering Reimbursements: Travel, Business Meals & Entertainment

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Subject Matter Experts

Sign-in sheet

Timing

Slides & Materials

Parking Lot

Feedback

Facilities

And…

Housekeeping

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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

reason fo

r ...

The date of the m

eal

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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

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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

here t.

.

Just

the first

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?

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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

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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 [email protected]

– 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): [email protected]; (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