PENN STATE - FINANCIAL

Policy FN10 OTHER BUSINESS EXPENSES AND ACTIVITIES

Policy Steward:  Office of the Corporate Controller

Contents:

  • Overview
  • University-Sponsored Events (Group Meals/Meetings, Alcoholic Beverages, Entertainment)
  • Expenditures Related to Events
  • Alcoholic Beverages
  • Entertainment
  • Flowers and Other Decorations
  • Procurement and Documentation
  • Events Involving Guests and Donors
  • Events Involving Students
  • Events Involving Employees
  • Gifts and Awards (Including Charitable Contributions and Memorials
  • Taxability and Reporting of Gifts and Awards
  • Gifts and Awards to Outside Guests, Donors and Friends of Penn State
  • Gifts and Awards to Students
  • Gifts and Awards to Employees
  • Memorials or Tributes
  • Support to Recognized Student Organizations
  • Charitable Contributions and Fundraising Events for Non-University Entities
  • Other Expenses
  • Office Furniture
  • Office Decor (Including Plant Maintenance Costs)
  • Office Food and Drink Service
  • Licenses and Certifications
  • ADDENDUM: RISK MANAGEMENT GUIDELINES FOR EVENTS
  • Events at Personal Residences
  • Alcoholic Beverages
  • Alcoholic Beverage Sales Restrictions
  • Further Information
  • Cross References

  • OVERVIEW:

    Budget executives and administrators are stewards of the financial accounts under their authority, and have a responsibility to assure that all financial transactions posted to these accounts are appropriate and reasonable, based on various criteria:

    Budget executives and administrators are accountable for judgments and decisions made regarding expenditures on accounts for which they are responsible. The Financial Officer is responsible for assuring the transaction is compliant with University policy and procedure, especially to assure compliance with external laws and regulations.

    Policy regarding expenditures will vary based on the source of funds for the account:

    Accountability reporting related to any of the expenditures under this policy may be implemented at the discretion of senior management. If such reporting is instituted, timeframes, parameters and format will be coordinated through the Financial Officers.

    UNIVERSITY-SPONSORED EVENTS (GROUP MEALS/MEETINGS, ALCOHOLIC BEVERAGES, ENTERTAINMENT)

    In the conduct of business, the University sponsors many events, including group meals, meetings, conferences, retreats and receptions. A University-sponsored event is one for which University funds are paying all or a portion of the cost of the event. This policy does not apply to events held by University faculty, staff or students if no University funds are expended in support of the event.

    Expenditures Related to Events

    Alcoholic Beverages

    The serving of alcoholic beverages at a University-sponsored event is an important decision within the context of the stewardship of University funds.  Alcoholic beverages may only be paid from limited sources of funding (see more detail below).  Choosing to serve alcoholic beverages paid for by the University reduces the funding available from these sources for other University and departmental priorities.

    See detail below on Events Involving Guests and Donors, Student and Employees for specific restrictions.  In general, alcoholic beverages paid for by the University are permitted at events with guests and donors, but are not permitted for student events unless approved prior to the event, and are not permitted for employee events unless the event is hosted and attended by the executive  (Dean, Chancellor, Vice President).

    The provision or serving of alcoholic beverages at a University-sponsored event, must comply with the following:

    Entertainment

    At certain University-sponsored events, entertainment may be appropriate. All such costs must be expensed to unrestricted donor funds.

    Entertainment which showcases Penn State is preferred, either through student groups or University athletic or artistic events. Tickets for admission to such events must be paid for on unrestricted donor funds. Tickets for intercollegiate athletic events must be purchased through the approved procedures established by the University. In certain cases, Policy AD75, University Events and Ticket Accountability, will apply.

    Flowers and Other Decorations

    Flowers and other decorative items purchased for University events involving University guests (such as table centerpieces) are permitted but must be paid on unrestricted donor funds. The one exception permitted on general funds is flowers for commencement exercises.

    Procurement and Documentation

    For events where costs are expected to exceed $10,000, a purchase order should be prepared to procure the event. For events less than $10,000, a purchasing card or Special Request for Check may be used, but detailed receipts are required, as well as reporting on those in attendance. All contracts for facility agreements, meals or catering must be forwarded to either Purchasing (events over $10,000 on a purchase order) or to Risk Management for signature by an authorized University representative (See University Policy FN11)

    Events which are catered by an outside food service provider must comply with University Policy AD26. All caterers providing service to Penn State must have adequate liability insurance coverage. A list of caterers meeting these requirements is available through Risk Management.

    Events Involving Guests and Donors

    Group meals, meetings or other events which focus on external guests or donors are permitted, but within the following policy parameters:

    Events Involving Students

    Meals, meetings and other events which include students, both graduate and undergraduate, are permitted and encouraged as part of student engagement. General funds may be used as the source of funding if the event has a clear educational or academic purpose and a faculty or staff representative will be present, or if the event falls under student affairs or activity programming. Unrestricted donor funds must be used for all other events, including those for social purposes and meals provided for regular class sessions.

    Events Involving Employees

    Events at which only faculty, staff, post-docs, fellows and graduate assistants are in attendance are permitted, but must be reasonable. Only events which have a clear business purpose, including meals between two or more employees, are permitted on general funds (up to the per diem limit for the location). All other events, including social events, must be paid on unrestricted donor funds and approved by the budget executive.

    STANDING EXCEPTION: Each administrative area may hold two social events per year which can be charged to general funds, to encourage networking within units as well as employee morale. These events would include a welcoming event at the start of the new academic year and a holiday event. Spouses and children may be included in these events, and for these two events only, can be charged to general funds. If spouses/partners and/or children are included in other events, including at the departmental level, all costs related to the inclusion of spouses/partners and/or children must be paid on unrestricted donor funds.

    All events involving employees must be reasonable in terms of cost and no more than the daily per diem for the location at which the event is held. The per diem per person includes all costs for food, facility rental, and entertainment. Costs per person exceeding this amount will be subject to post-audit review and may be considered personal costs for the host if found to be unreasonable or excessive.

    Alcoholic beverages are discouraged at employee events and should be considered a personal expense if offered (i.e., available through a cash bar or paid by host).  Even if provided at no cost to the University, the Risk Management Guidelines for Events: Alcoholic Beverages should be followed.

    Alcoholic beverages may be provided at employee events and paid from unrestricted gift funds ONLY when the event is sponsored and attended by the President of the University, The Executive Vice President and Provost, Vice Presidents, Vice Provosts, Deans, other executives (with approval of The Executive Vice President and Provost) or Chancellors (with the approval of the VP for Commonwealth Campuses) for the unit. The cost of alcoholic beverages should be within the per diem limit at which the event is held.

    Serving of alcoholic beverages must be appropriate based on the business purposes of the event and use of unrestricted gift funds for this purpose should be vetted against other potential uses of those funds in meeting unit priorities. Group meetings where only alcoholic beverages are consumed are highly discouraged and alcoholic beverages are never permitted to be served prior to 3pm on a business day.

    Purchase of alcoholic beverages and related costs at employee only group meals/events which are not sponsored as noted above, will be considered a personal expense and will not be reimbursed or permitted as an expenditure against any University funds.  Spouses/partners, children, University retirees, post-docs, fellows, graduate assistants, and Penn State students cannot be considered University guests for purposes of this guideline.

    GIFTS AND AWARDS (INCLUDING CHARITABLE CONTRIBUTIONS, SUPPORT TO STUDENT GROUPS, AND MEMORIALS)

    Recognizing individuals and organizations for achievement, service to the University and appreciation of their contributions to the University community are appropriate in certain cases, but must recognize the source of funds to determine if such gifts or awards are appropriate. Generally, gifts to employees are not permitted and no gifts or awards are permitted to be paid on federal or state grants or contracts. Gift and endowment funds may only be used as a source if permitted by the guidelines or gift purpose.

    Gifts are tokens of appreciation or consolation, while awards are given in merit recognition of notable achievement, including retirement. Door prizes and other prizes are considered to be awards for purposes of this policy.

    Payments to participants in research studies, including surveys, are not considered gifts or awards. These are addressed in University Procedure CR2078.

    Taxability and Reporting of Gifts and Awards

    Cash gifts and awards, including gift certificates, are taxable to the recipient, no matter what the source of funds or the dollar amount. All non-cash gifts and awards purchased with University funds or donated to the University are taxable to the recipient, but only need to be reported if valued at $100.00 or more. All reportable taxable gifts and awards must be reported to Payroll/Accounting Operations for appropriate reporting. Following is an overview of taxable and reportable gifts and awards:

    EMPLOYEE NON-EMPLOYEE
     AWARD  Taxable?  Reportable?  Taxable?  Reportable?
     Cash  Yes  All Payroll  Yes  $100 or more
    Accounting Operations
     Non-Cash  Yes * $100 or more
    Payroll
     Yes  $100 or more
    Accounting Operations

    * The only non-taxable exceptions are awards to employees for length of service (i.e., 25 year chairs) or for safety. See also Policy FNG04.

    Financial Officers should assure that award recipients are properly notified of taxability. Employees will have the value of the award and applicable taxes withheld through the payroll system. Non-employees should be notified based on the following:

    The Tax Code provides that prizes and awards are taxable, and requires the University to report the value given where the recipient receives more than $600 during any calendar year. To ensure compliance with its reporting obligations, the University requires the recipient of any prize or award valued at an amount of at least $100 to provide his or her name, address and social security number before winnings can be claimed.

    Gifts and Awards to Outside Guests, Donors and Friends of Penn State

    Gifts and awards are appropriate to recognize those who support the University. Gifts and awards are permitted for these individuals or organizations, but must be paid on unrestricted donor funds, or funds designated for such a purpose. These are never permitted on federal or state contracts or grants.

    Flowers and plants may be given as gifts to non-employees, but must be purchased on unrestricted donor funds, or funds which specifically allow for such purchases.

    Gifts and Awards to Students

    Gifts and awards to students are generally permitted. Scholarships are not covered under this policy, with an exception to endowed/non-endowed scholarship sources used for student research and student travel expenditures. Scholarships are addressed in University Policy FN09. Following are the parameters under which gifts and awards other than scholarships may be given:

    Travel or research support may also be provided to students and may be considered a scholarship or award. There are three ways to provide travel support to students:

    1. If the University pays all costs for travel directly to a third party, it does not have to be entered into the Student Financial Aid system through ISIS.
    2. If a student personally pays for expenses and receives reimbursement for these expenses through the standard travel procedures, then it does not have to be entered into the Student Financial Aid system. Travel should be reimbursed through the Employee Reimbursement System (ERS) as a non-employee travel reimbursement.  The Special Request for Check should not be used.  All University Travel policies apply to the reimbursement.
    3. If the research or travel support is granted directly to the student, this can be treated as a scholarship/award to the student and, in that case, would be entered into the Student Financial Aid system through ISIS. This method of reimbursement should be employed only if direct payment of expenses or reimbursement to the student is not appropriate.

    If a student is directly reimbursed, or if the University pays for the travel directly, there should be no adjustment to the student's cost of attendance in the Student Financial Aid system. The source of funds to be used to support student travel is dependent on the purposes of the travel.  The Financial Officer should be consulted to determine the appropriate source of funds.

    Gifts and Awards to Employees

    These are generally not permitted, except for the following: Gifts for birthdays, holidays (including Boss’ Day or Administrative Professional’s Day) and other personal events are not permitted from any source of funds. These would be considered personal expenses for supervisors or others who wish to recognize such events for their employees or colleagues.

    Memorials or Tributes

    The passing of employees, students and friends of the University are events which should be recognized by the University through an act of condolence. Following are guidelines to be followed:

    University memorial service costs are permitted if approved by the budget executive of the unit, but must be reasonable based on the impact of the employee or student, and would generally be expected to be hosted on campus with any costs paid on unrestricted donor funds.

    Support to Recognized Student Organizations

    University departments may provide financial support for Recognized Student Organizations. General funds may only be used when the event or activity being supported or co-sponsored has a clear educational purpose; otherwise, unrestricted funds must be used. University departments cannot provide funding to student groups which are not Recognized Student Organizations.

    University departments are not permitted to give Recognized Student Organizations equipment, furniture, computers or other items. If these items are no longer needed, normal disposition procedures must be followed. Recognized Student Organizations would be able to purchase such items through Lion Surplus.

    Charitable Contributions and Fundraising Events for Non-University Entities

    Direct contributions or donations from general funds of the University for any purpose are not permitted. However, in certain instances, it may be in the best interest of the University to make donations directly to select organizations or to be represented at non-University fund-raising events. Reimbursement for direct donations, or expenses incurred in attending such events, will be treated as an exception (although general funds are not to be used as the source for reimbursement). The request for reimbursement must be submitted to the budget executive of the administrative unit, accompanied by a written justification that indicates that such direct donation or attendance is of significant benefit to the University and its off-campus relations. The purchase of tickets for raffles or other small games of chance are prohibited expenditures from any funds received and/or administered by the University, regardless of the source of funds. Under no circumstances may contributions or donations be made, directly or indirectly, to a political party, a political candidate or an elected official from any funds received and/or administered by the University, regardless of the source of such funds. Purchase of sponsorships, advertising or other promotional items related to a non-University fundraising event or charitable promotion may be permitted on general funds if the cost is comparable to other promotional costs and is charged to a marketing or promotions account. Otherwise, unrestricted donor funds must be used as the source of funding.

    NOTE: University entities are not permitted to conduct raffles to raise funds. University-affiliated groups, such as alumni groups or advisory boards, are also restricted from conducting raffles if any University funds are involved; this includes if the group's funds are held in a University bank account. Recognized student organizations may conduct raffles in accordance with provisions outlined in "Policies and Rules for Student Organizations."

    OTHER EXPENSES

    There are numerous other expenses which may or may not be appropriate expenditures from University funds:

    Office Furniture

    Standard office furniture, including traditional, standing, and adjustable height desks, files, tables and chairs are permitted to be paid on general funds, if the cost of the furniture is reasonable. Alternative work station equipment, such as treadmill desks, may not be purchased on general funds. Purchase of this equipment is only permitted on unrestricted gift funds and MUST be approved by the Budget Executive.

    Office Décor (Including Plant Maintenance Costs)

    Office Food and Drink Service

    Licenses and Certifications

    Licenses or certifications which are a requirement to be qualified for the position are not permitted expenditures from University funds and are considered a personal expense. However, continuing education required to maintain the license may be paid for by the department if deemed appropriate to the individual's professional development. Licenses and certifications which are not required to be qualified for the position, but which are necessary to perform the work and are of benefit to the University, such as licensing for pesticide application or for food safety requirements, may be paid for by the University, at the discretion of the department.

    ADDENDUM: RISK MANAGEMENT GUIDELINES FOR EVENTS

    Events at Personal Residences

    Group meals or meetings held at private residences are not covered by University insurance, with the exception of Deans, Chancellors, Vice Presidents, Vice Provosts and other specifically designated senior executives. The use of a caterer is not required for events at an employee's home.  However, if a caterer is used, the caterer must be from the List of Caterers maintained by Risk Management, having adequate insurance coverage. The employee should be aware that their personal homeowner's policy would be the primary liability insurance coverage for these events, given that the host held the event at their home and was responsible for controlling the circumstances of the event.

    Alcoholic Beverages

    As noted in this policy, the provision of alcoholic beverages at University-funded or sponsored events holds increased potential for liability. To request permission to possess/use alcoholic beverages for activities on the property of The Pennsylvania State University per the provisions of Policy AD18, a Permission to Possess/Use Alcoholic Beverages Form must be completed and forwarded to Risk Management for final approval prior to any University-sponsored or funded event.  The following are requirements which must be met for all University-funded or sponsored events which include the serving of alcoholic beverages, even if provided through a cash bar, or paid by an outside sponsor or individual: If the event is held at an established hotel, restaurant or other facility: If the event is being held at a personal residence or a facility which does not offer catering or bartending services (such as a community center, outdoor venue or on University premises):

    Alcoholic Beverage Sales Restrictions

    On  University-owned property affiliated with the University Park Campus (including Rock Springs, Stone Valley and other facilities), for events which otherwise qualify to include alcoholic beverages under this Policy and AD18, sponsoring units may utilize Penn State Hospitality Services, as the liquor licensee, to either provide a cash bar or to provide alcoholic beverages to  the sponsoring unit for a charge.  No other liquor licensee will be permitted to sell alcoholic beverages on University property.  This paragraph only applies to licensees selling alcoholic beverages at an event on University property or charging the unit for alcohol purchased by the licensee. It does not prohibit Campus Catering or independent caterers from serving alcohol purchased by the unit sponsoring the event.

    At all other University locations, units may host events which otherwise qualify to include alcoholic beverages by this Policy and AD18, at which a licensee supplies alcoholic beverages through a cash bar or charges the sponsoring unit.  Any such licensee must submit to a pre-approval process through Risk Management, which includes signing an agreement with the University in advance of any event.

    FURTHER INFORMATION:

    For questions, additional detail, or to request changes to this policy, please contact the Office of the Corporate Controller.

    CROSS REFERENCES:

    AD18 - Possession, Use and Distribution of Alcoholic Beverages

    AD26 - Sale of Food and Beverages at University Locations

    AD27 - Commercial Sales Activities at University Locations

    FNG04 - Employee Reward and Recognition Programs


    Effective Date: August 18, 2014
    Date Approved: August 13, 2014
    Date Published:  August 18, 2014

    Most Recent Changes:

    Revision History (and effective dates):
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