Responsible University Officer(s):
- Director of Purchasing Services
- Beth Tapp
Business expenses are business-related purchases where the goods or services generally do not require use of an official University purchase order as outlined in the Administrative Policy: Purchasing Goods and Services. These expenses are often paid via payment cards, expense reimbursement, or non-purchase order payments. These expenses are related to employee-only activities. If non-employees are present and integral to the activity, see Administrative Policy: Hospitality and Entertainment of Non-Employees.
Employees who incur or approve business-related expenses must exercise prudent judgment to ensure that the expenses are for legitimate University business and comply with the Expense Allowability Grid, regardless of funding source.
If a proposed expenditure is not specifically addressed in the Expense Allowability Grid, it may still be allowable. In those cases, the following principles should guide employee decision-making in conjunction with the unit’s Chief Financial Manager:
- The expenses must be reasonable, allowable, and allocable under governing laws, regulations, and University policy;
- The purpose for the expenses must directly support the University’s mission of teaching, research, and outreach;
- The expenses may not create, maintain, or increase the value of a personal asset, or be personal in nature.
Campuses, colleges, and vice presidential units may interpret and apply this policy more restrictively where budget, reputation, prior patterns of behavior, or other risk factors are a consideration. Campuses, colleges, and vice presidential units are not allowed to establish their own separate policies in lieu of this University-wide policy.
Exceptions should be infrequent and must route through the unit’s Chief Financial Manager, which must be escalated to the University Controller for final approval. If an exception is determined to be unallowable, the expense may not be reimbursed.
External research sponsors may have more or less restrictive rules than the University. Business expenses on sponsored funds must follow the most restrictive applicable policy (University policy or sponsor rules). However, if the sponsor has given prior written approval, expenses generally not allowed on non-sponsored funds may be allowed on sponsored funds.
Business expenses are typically unallowable on sponsored projects. "Unallowable" expenditures for Sponsored Projects include (applicable account codes in parentheses):
- Advertising to promote University products and/or services (720701)
- Alcoholic beverages (720702)
- Memberships (720311)
- Settlements (720704)
See also Examples of Unallowable Costs for a complete list of these types of expenditures.
Employees (faculty and staff) must provide a business justification and documentation in accordance with Administrative Policy: Documenting Financial/Accounting Transactions for all business expenses.
Food and refreshment expenses under this policy require the following information:
- The purpose of the meeting or event;
- Number of attendees
- Names may be required as outlined in the Justification Standards job aid, per the Administrative Policy: Documenting Financial/Accounting Transactions
- The expected cost of the meal per planned number of attendees.
Any expenses that are paid for as an out-of-pocket expense should be occasional and must be submitted for reimbursement within 60 days of incurring the expense. Departments may require employees receive prior written approval for any out-of-pocket expenses. Employees must process expenses incurred near the end of the fiscal year in accordance with the year-end accounting calendar or before the end date of the grant, depending on which deadline is sooner, to ensure reporting in the correct accounting period.
Reimbursement for parking and mileage may be submitted quarterly, semi-annually, or on another infrequent basis (as long as it does not cause a hardship to the employee) to reduce administrative burden of processing this sort of reimbursement. These types of expenses may be accumulated until the total reaches $100.
Campuses, colleges, and vice presidential units may receive requests not meeting the requirements for documenting and requesting reimbursements in a timely manner. Business expense reimbursement requests which are not adequately documented in accordance with Administrative Policy: Documenting Financial/Accounting Transactions, or are not submitted within 60 days, should be denied. In rare circumstances, there may be reimbursements which cannot meet the requirements for adequate documentation or submission within 60 days, due to legitimate extenuating circumstances which impaired the employee from meeting the requirements. In those situations, after consultation between the employee's unit and the Chief Financial Manager for the campus, college, or vice presidential unit, the reimbursement may be approved, and the rationale for determining that the circumstances warranted approving the request must be documented.
When reimbursement requests do not meet the requirements for documentation or timely submission, and there are no extenuating circumstances, but denial of the request would impose a financial hardship to the employee, the reimbursement request may be approved as a taxable reimbursement to the employee. The amount of the taxable reimbursement must be reported to Payroll, for inclusion in the employee's calendar year taxable compensation. Taxable reimbursements should be rare and should be approved only after consultation between financial management in the employee’s unit and the Chief Financial Manager for the campus, college, or vice presidential unit.
Some expenses, such as Standard or Professional Services, capital equipment, or payments to individuals, must not be paid for as an out-of-pocket expense. In addition, any expense that may cause a financial hardship should receive approval prior to incurring the cost.
Food and Refreshments
Food and refreshments may be provided in connection with business activities involving University employees that are reasonable and appropriate to the purpose of the activity. Purchase of food/meals is allowable solely as a convenience to the employer and in those instances where:
- meetings are infrequent
- employees may not leave for a normal meal due to the time constraints associated with the meeting or training session or
- an employee is conducting business on a different system campus other than their own.
Food may be provided occasionally or infrequently (quarterly or semi-annually) at regularly scheduled meetings. Any business activities that are held at an individual’s home must follow the policy and applicable limits.
University policy does not permit payment or reimbursement when two or more employees choose to have a meal together to continue their business as an incidental part of the meal, when the meal is of a reciprocal nature, or when the meeting could have been scheduled during regular working hours.
Dollar limits within the Expense Allowability Grid include all associated charges (food, beverages, taxes, tips, etc.) excluding room rental fees. Total expenses must be calculated based on the planned number of attendees and must be well documented in advance, despite actual attendance.
Meal limits for business expenses must not exceed the following limits:
- Light Refreshment: $10 average per attendee
- Breakfast: $25 per attendee
- Lunch: $25 per attendee
- Dinner: $50 per attendee
Meals with paid consultants should be infrequent and have a business purpose.
Meals While in Travel Status
When several employees are in travel status and dine together, the fact that they are dining together does not constitute a business group meal and should not be paid as a business group meal (all attending should pay their share). Since each employee is in travel status, each would have a per diem available and will be reimbursed accordingly. The purpose of the meal in this case is not to conduct business, and is not a business group meal. In addition, University employees should not serve as hosts for other non-employees who are also in travel status and eligible for a travel allowance.
Hospitality expenses incurred while traveling must follow the Administrative Policy: Hospitality and Entertainment of Non-Employees.
Expenses for Alcoholic Beverages
Expenses for the purchase, use, or consumption of alcoholic beverages are permitted under the following conditions:
- The activity or event for which the expense is incurred must have a legitimate University business purpose (for example, a ceremony or reception recognizing professional life achievement, tenure, or awards);
- The alcoholic beverages should be moderately priced and paid for with University non-sponsored private funds only, and they must be allowable on the intended source of funds. See Chart of Accounts, FundTypes;
- The expenditure and the circumstances for the consumption of alcoholic beverages must not jeopardize the University’s reputation, or the health and welfare of those involved;
- The expenditure must follow the spending limits for business expenses;
Alcoholic beverage sales and/or service on University owned or operated property by University and non-University entities is covered in Administrative Policy: Alcoholic Beverage Sales and Service and Venue Liquor Licensing.
Certain auxiliary units (for example, Intercollegiate Athletics and dining services) may purchase alcohol for resale to the general public. This is the only instance where use of institutional funds for the purchase of alcohol, for resale in the normal course of business, is authorized.
Tips should not exceed 20%.
- In some cases, tips on meals may exceed 20% when there is a mandatory fee charged for a large group.
- Tips on delivery of items such as food, flowers, etc. should be reasonable, and in most cases may be less than 20%. Mandatory fees should be taken into account when tips are calculated.
- Tips may be rounded up to the nearest whole dollar.
Funds from conferences and workshops sponsored by University units, which are funded entirely from participant fees, sponsorships, event business agreements, or income generated from the conference or workshop, may be expended to further the purposes of these events. The funds generated should cover all of the costs. If the funds do not cover all of the costs, individual meal costs (per meal event) must not exceed $100 per attendee (limit includes food, beverages, taxes, tips, etc.).
Special events, which have extraordinary significance and are important to the University's mission, are allowable. Special events generally occur only once or twice a year and are determined or approved by campus, college, and vice presidential unit leadership.
Events to recognize significant University (awards) or individual (graduation and tenure) professional achievements typically involve or include non-employees. Individual meal costs (per meal event) must not exceed $100 per attendee (limit includes food, beverages, taxes, tips, etc.).
Departments are encouraged to recognize employees for their contributions to the University either at an individual or group level. Some examples may include:
- New Employee Welcome Lunch
- Years of Service Award
- Milestone Accomplishment (Project)
- Annual Recognition
For these types of events, the limits provided in this policy must be followed. The Internal Revenue Code stipulates that the value of some awards must be included in an employee’s income and provides exclusions for other awards. See Appendix: University Employee Recognition Awards for additional information.
Reimbursement for family members is not permitted unless there is a specific business purpose for the family member’s attendance at the event such as a retirement or professional recognition event.
Business mileage is the travel an employee incurs beyond normal commute mileage (from home to the office and home again) on a normal workday. Employees may request reimbursement for any business mileage incurred. If an employee does not report to their primary work location during a business day, full mileage between home and the meeting location is reimbursable at the IRS mileage rate.
The mileage rate includes gas, vehicle maintenance, insurance, and other personal vehicle-related costs.
An employee who uses transportation methods other than their own vehicle to attend local meetings may claim actual transportation expenses up to the amount they would be reimbursed if they claimed mileage and parking at non-University locations.
Meal Allowance When Travel Extends the Employee's Work Day (Extended Day Travel)
An employee may qualify for an occasional meal allowance when traveling without an overnight stay, as a non-taxable de minimis fringe benefit, if the travel causes an employee to work in excess of 12 hours. If this occurs, the employee may be eligible for a non-routine, non-regular single meal allowance equal to the dinner per diem rate published by the General Services Administration at the discretion of their department head.
Cell Phones and Data Plans
The University will not provide salary allowances, expense reimbursements to, or payments on behalf of faculty and staff (via University-paid payment card or direct bill to the University), for cell phones, data plans, or other equipment with cellular connectivity that are used in the course of performing University job-related business. Exceptions will be granted for business use in special situations as identified below, or in other situations where cell phones, data plans, or other equipment are necessary to conduct a specific activity. Such exceptions must be allocated and charged directly to the benefitting program(s) or project(s).
- Public Safety and Disaster Preparedness - Departments involved in public safety, disaster preparedness, or emergency response are encouraged to use departmental contracts when cellular equipment or communications are required (see #2 below).
- Departmentally-Owned Contracts - Certain units may have special needs that justify departmental ownership of cell phones for temporary assignment to or rotation among employees. Examples of this situation include delivery drivers, on-call medical or technical personnel, security, Facilities Management personnel, and parking personnel. Departments may incur expenses for cell phones in these situations. Departmentally-owned cell phones are strictly for business use only and cannot be used for personal use.
- Research - Where cell phone expenses are allowed and approved in conjunction with a specific grant, such expenses are allowable. All expenses must be charged to the grant in accordance with sponsor requirements and University policies governing sponsored projects.
- Pagers - Some departments use pagers for their communication needs. Departments may cover modest cost for pagers.
- International Expenses - Units may reimburse employees for incremental expenses incurred when international cell phone or data plan usage is required for official business, and the employee’s existing cell or data contract does not cover international calling. Units cannot reimburse employees when an employee's standard cell phone plan includes international communications.
Professional dues/license fees specifically required or customary for a faculty member’s academic discipline or an employee’s job may be allowable. Other relevant dues may be allowable when a business connection and a justification for how it will benefit the University can be provided and are dependent on budget availability.
Lifetime memberships are generally not allowable unless the cost of the lifetime membership is equal to or less than a normal five-year annual membership.
Dues for organizations unrelated to the employee’s job responsibilities or academic discipline, especially those where personal benefits are included, are not allowed (for example Sam’s Club, Delta Sky Club, or social club).
Costs to publish research in professional journals, reprints of articles published, and other publication costs are allowable. Costs to publish research manuscripts/books are allowable only if the publisher has a peer review process.
Applicability of this Policy to Students
Expenses involving student engagement are closely linked to business expenses. If meetings or events include both students and employees, and are for the purpose of student engagement, this policy must be followed except for the frequency (may be more frequent) of events where food is provided. Students are not required to be part of one of the formal groups listed below in order for this policy to apply. If student employees are present and the purpose involves their employment status, then employee limits must be followed. See also Special Situations for Intercollegiate Athletics.
Campus Life Programs
Campus Life Program (CLP) groups must follow all University policies. As a part of a University department, CLP’s may occasionally raise funds for charitable organizations or activities and must use the appropriate accounting procedures required by the University or the University of Minnesota Foundation.
Registered Student Organizations
Registered Student Organization (RSO) groups must follow all University policies. As a separate legal entity from the University, these groups may occasionally raise funds for charitable organizations or activities based on the specific legal status of the organization and should follow any registered student group process in doing so on campus. The University of Minnesota Foundation does not accept gifts for RSO’s.
Special Situations for Intercollegiate Athletics (all campuses)
All situations and expenses must follow NCAA guidelines.
- Food/meal expenses for student athletes are exempt from this policy.
- Events that include student-athletes, student recruits and their parents, and staff who may be in attendance are considered recruiting events and must follow the limits set in the Administrative Policy: Hospitality and Entertainment of Non-Employees. Occasionally staff family members may also be present at these events and with proper justification their expenses would also be allowable.
- Recruiting, student-athlete team building, and personal development expenses, other than meals, may be based on industry standards and departmental funding capacity.
REASON FOR POLICY
To comply with federal and state law, to comply with Internal Revenue Service guidance regarding expense reimbursements made pursuant to “accountable plans,” and to satisfy restrictions imposed by funding agencies. As a public institution, the University must demonstrate appropriate use of funds entrusted to it by various constituencies and assure that expenses do not personally benefit University employees.
|Primary Contact(s)||Beth Tappfirstname.lastname@example.org|
|Exception Approvals||Sue Paulsonemail@example.com|
|Allowable Costs||University Financial Helplinefirstname.lastname@example.org|
|Taxability of Employee Recognition Awards||University Tax Departmentemail@example.com|
|Reporting Taxable Awards||Human Resources Helpline (4-UOHR)||612-624-8647 (4-UOHR)
Greater Minnesota: 1-800-756-2363
- The amount of expense for goods or services which can be charged to (or allocated to) a particular unit, activity or function because the goods or services provide a commensurate benefit to that unit, activity or function.
- An expense is allowable when it is acceptable to charge it to a particular source of funds. Expenses may be deemed allowable by law or regulation; by external parties such as donors or sponsors; or by the University, when the financial or reputational risk associated with a particular expense falls within the University's tolerance level.
- Cell Phones
- Mobile telecommunication equipment, such as cell phones, cell phones with data plans, smart phones, and other equipment utilizing cellular connectivity.
- De Minimis Fringe Benefit
- For tax purposes, a de minimis fringe benefit qualifying for tax-free treatment is a benefit that is so small as to make accounting for it unreasonable or administratively impracticable. Both the frequency and value of the benefit must be considered; the benefit must be occasional or unusual in frequency and the value must be less than $100. A qualifying de minimis fringe benefit must be either property or a service and cannot be cash or a cash equivalent. A gift card or gift certificate that is considered to be a cash equivalent item is never excludable from income as a de minimis fringe benefit. See Appendix University Employee Recognition Awards for further guidance.
- Discretionary Funds
- Those funds that are given to faculty or staff to be used for business-related goods or services as needed or desired by the individual.
- Hospitality & Entertainment
- Expenses for development or maintenance of relationships that benefit the University; official recognition, recruiting, receptions or similar activities; concert and athletic tickets; gifts or flowers.
- Non-Current Funds
- Those funds used for activities which are not part of the “current operations” of the University. Non-current funds include loan, endowment, plant and agency funds. For purposes of this policy, agency fund expenditures are subject to approval by the constituency the funds are being held on behalf of. See Chart of Accounts, Fund Types.
- Non-Sponsored Funds
- Funds available for use on activities that are not externally-sponsored research. For a list of non-sponsored funds numbers, see Chart of Accounts, Fund Types.
- Personal in Nature
- Expenses that do not exclusively benefit the University.
- Private Funds
- Those received from individuals or external entities primarily through gifts. Funds cannot be considered private if they have been received from activities that are part of the University’s primary mission (teaching, research, and outreach). Private funds include gifts from University recognized foundations, individuals, business and industry, and unrelated foundations. See Chart of Accounts, Fund Types.
- Public Funds
- Those received from “public” sources, such as students, governmental entities, or taxpayers, and which are intended to support the primary mission of the University. As such, public funds should be used in a manner which would withstand the test of public scrutiny. Public funds include federal and state appropriations, tuition and fees, income generated from external sales activities, and all sponsored research funds. See Chart of Accounts, Fund Types.
- Reasonable Costs
- “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.” (OMB Uniform Guidance 200.404.)
- Reciprocal Nature
- Expressing mutual action or relationship. For example, the parties reciprocate by paying for each other's meals.
- Special Expenses
- Expenses of an unusual or infrequent nature which are not normally associated with the conduct of teaching, research or outreach. Special expenses may be allowable and reimbursed if it can be shown that there is a direct benefit to the University for having incurred the expense, either by supporting its mission or by improving its reputation with the public.
- Sponsored Funds
- Money received by the University from an external party to fund a sponsored project. Sponsored projects are governed by specific terms and conditions, and are separately budgeted and accounted for in accordance with OMB Uniform Guidance, University policies governing sponsored projects, and/or the terms of the sponsoring entity. Sponsored funds may include money received to fund grants, contracts, and cooperative agreements for research, training, and other public service activities.
- University Funds
- All funds; non-sponsored, private, public, noncurrent, discretionary
- Certified Approver
- For expenses on sponsored funds; reviews expenses for accuracy (including accounts being charged), appropriateness and compliance to applicable policies, procedures and Sponsor agreement. Takes action to approve, return or deny expenses based on review. For expenses to be denied or reimbursed as taxable, consults with department head, RRC Manager, or Chief Financial Manager.
- Chief Financial Manager
- Provide oversight and management of the financial activities and financial management practices within their Resource Responsibility Center. Review, approve, or deny expense reimbursements that are not adequately documented or not submitted within 60 days. Review and approve budgets for special events that have extraordinary significance and importance to the University’s mission. Approve alcohol for employee events. Guide employee decision making for expenses not specifically addressed in Expense Allowability Grid.
- Internal Audit
- If inappropriate expenditures are suspected or identified while conducting an audit or investigation, Internal Audit will refer the incident(s) to the Office of the Controller for evaluation and a final determination. The Controller may require the authorizing administrative unit to recover the expenditure from the individual involved or to report the amounts to Payroll Services for inclusion in the employee’s taxable income that will be reported to the Internal Revenue Service.
- Document expenses via transactions in enterprise systems or using the forms provided with the policy (or equivalent) when necessary. Correctly code the expenditure(s) so that expenses that are considered "unallowable" from an OMB Uniform Guidance cost perspective are identified. Departments and approvers are responsible for making sure that hospitality, alcoholic beverage, and other special expenses are documented in accordance with appropriate standards. See procedure Documenting Hospitality, Alcoholic Beverage, and Other Special Expenses, and the job aid Transaction Justification and Documentation Standards for all Non-Sponsored and Sponsored Transactions.
- Supervisory/Management Personnel
- Responsible for policy compliance. Ensure reimbursements requests for cell phone related expenses are not submitted or approved (see international exclusion).
- Purchasing Services
- Develops and maintains policy and procedures and monitors compliance. Provide guidance and assistance to departments in evaluating and determining the allowability of expenses in various situations.
- University Controller
- Provide guidance and assistance to departments in evaluating and determining the allowability of expenses in various situations. Grant exceptions to the policy in situations where one is allowed and requested.
- University Employee
- Responsible for policy compliance.
- Board of Regents Policy: Alcoholic Beverages on Campus
- Administrative Policy: Alcoholic Beverage Sales and Service and Venue Liquor Licensing
- Administrative Policy: Drug Free Campus & Work Place
- Administrative Policy: Hospitality and Entertainment of Non-Employees
- Federal Law Drug Free Schools & Communities Act - Amendments of 1989
- Federal Law Drug Free Workplace Act of 1989
- Job Aid: Transaction Justification/Documentation Standards for All Non-Sponsored and Sponsored Transactions
- Direct Charging the Costs of Cellular Phones and Paging Devices to Sponsored Agreements
- Chart of Accounts, Fund Types
- July 2018 - New Policy. After extensive consultation with financial leaders across the campus, common pain points were identified. A gap in policy as it relates to non-recruitment/non donor relations types expenditures needed to be covered. This new Business Expense Policy addresses the gap. All policy/procedures related to expenses for employees only have been removed from the Hospitality & Special Expenses policy and incorporated into the new Business Expenses policy. Cell Phone and Business Data Plan policy has been rolled into the Business Expense policy and that policy can be retired. The Hospitality & Entertainment of Non-Employees policy will apply for hospitality or entertainment purposes related to recruitment and/or donor relations only.