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

2 Subject Matter Experts Sign-in sheet Timing Slides & Materials Parking Lot Feedback Facilities And… Housekeeping

An oh so gentle reminder… 3

Baseline Quiz 4

When a traveler uses a personal car, which is not reimbursable? A. Gas B. Tolls C. Mileage D. Parking 5

What ground transportation to or from the airport is not allowable? A. Taxis B. Airport shuttle services C. Sedan service D. Public transit, such as the “T” 6

Travelers reimbursed at the lodging per diem rate must provide: A. Proof of travel B. Description of special circumstances C. All of the above 7

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 8

What is the maximum allowable cost in FAS for business dinners? A. $50 per person excluding alcohol, tax, and tip B. $75 per person excluding tax and tip C. $100 per person including tax and tip D. There is no maximum allowable expense 9

To document a business meal attended by multiple people 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 10

11 Understanding the Policies Harvard’s Travel and Business Expense Policies: These together provide reimbursement to employees and approved non-employees for necessary and reasonable travel, entertainment, and non-travel business expenses incurred while conducting authorized University business They ensure 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

12 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 (Circular A-21) University Policies Sponsor/Donor Terms FAS Policies

13 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 all three must be treated as income.

14 University Business Expense Policy Promotes consistency to ensure that employees are treated equitably and reduces business risk through compliance. Ensures that external compliance requirements are satisfied and promotes good business practice. University will reimburse or directly pay properly substantiated business expenses submitted within 90 days of incurring the charge. Exceptions to policy require approval in writing from FAS Associate Dean for Finance or proxy.

15 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 (FATREF) apply

16 University Policy Restrictions Repetitive Food and Travel 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

What are the FAS Meal Guidelines? A. Breakfast - $25 Lunch - $50 Dinner - $100 (per person including tax and tip) B. Breakfast - $20 Lunch - $45 Dinner - $100 (per person including tax and tip) C. Breakfast - $25 Lunch - $50 Dinner - $125 (per person including tax and tip) 17

18 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 Telecommunications Payment Request Form (Internet service provider, data plans, business calls on a cellphone) - Submit with every reimbursement request - Equipment would rarely be 100% business

What Are Dept. Responsibilities? Communicate policies and procedures to everyone Assign hierarchy of responsibility for preparation and approval of reimbursement requests 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? 19

20 5 W’s: Business Purpose Detailed business purpose is required by IRS accountable plan: – WHO – WHAT – WHEN – WHERE – WHY 20

21 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 21

22 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 22

23 5 W’s: Where & Why ● Where: includes exact location of trip ● for trips with multiple locations, list them all ● Why: provides reason expense was incurred and how it relates to the fund being charged 23

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: (Effective date for per diem should agree with dates of travel) 24

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 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 25

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 26

Prorating Per Diems A. All 5 since that’s where the trip originated B. Just the first and last C. None D. We don’t have enough information to know 27 A professor is back from a multi-city trip and is asking for meal per diem instead of actual cost. He flew into and out of New York City with the remainder of the trip spent in Chicago. He has the NYC per diem rate for the full 5 days of his trip. How many days should actually 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 28

29 Documentation Requirements All travel and purchases must be – Business expenses primarily benefiting University – Properly documented Thorough business purpose required on either Travel Expense Report (WV) or Employee Reimbursement Form Proper substantiation of amount by providing receipts or a Missing Receipt Affidavit Signed by reimbursee – not optional Signed by approver – not optional Reimbursement requests must be submitted within the appropriate timeframe. 29

A professor has purchased some books for research. She wants to pay for them using her TAD 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 30 Timeframe for Submission

31 Timeframe for Submission To satisfy IRS accountable plan, travel expense reports must arrive at the Travel Office within: – 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 31

32 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 32

33 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” 33

Who Is Subject to Timeframe? A. Faculty (junior, senior, visiting) and staff (full and part-time) B. Preceptors, lecturers, TA’s, and Fellows (post- docs and research) C. Teaching Fellows and Research Assistants D. Only A and B E. All of the above 34

Who Is Not Subject to Timeframe? A. Teaching Fellows and Research Assistants B. Job applicants C. Stipendiary post- docs D. Only A and C E. All of the above 35

36 What Receipts Are Needed? Original receipts for all expenses of $75 or more All hotel receipts (hotel folios) Electronic receipt requirements – Must be a receipt, not a confirmation

37 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

38 How to Request an Exception Exception approval allows for processing of expenses as a non-taxable reimbursement through Travel Office To request policy exceptions: – Complete Exception Request Form – Department administrator or financial officer submits completed form to – Lost or misplaced receipts are not “extenuating circumstances”

39 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 NOTE: when returned, it will have a “green sheet” attached. Keep this and return with resubmission

40 Resources FAS Office of Finance: Administrative Systems Assistance Program (ASAP): (617) Travel and Reimbursement Office: Listing of Harvard negotiated rates - Mileage, exchange, and per diem rates - Travel agency partners, etc.

41 Other Resources For Sponsored Research: FAS Office of Research Administration Services: For General Travel, Reimbursement, or Exception Questions: Josh Dunn, Procurement Administrator, (617) Reimbursement and Card Services, (617) card-services