Policy reference: FN10 Other Business Expenses and Activities - Purpose
This procedure operationalizes Policy FN10 Other Business Expenses and Activities by establishing the required processes, controls, documentation, approvals, procurement, and reporting of other business expenses.
This procedure must be applied in a manner consistent with Policy FN10 Other Business Expenses and Activities. In the event of a conflict between this procedure and the policy, the policy shall govern.
Policy reference: FN10 Other Business Expenses and Activities - Scope
This procedure applies to all Penn State campuses, colleges, departments, and units that initiate, process, or approve transactions.
Policy reference: FN10 Other Business Expenses and Activities - Definitions
All definitions applicable to this procedure are established in the associated University policy. This procedure does not create, modify, or interpret definitions. In all cases, the definitions contained in the governing policy prevail.
Policy reference: FN10 Other Business Expenses and Activities - Responsibilities
- Ensure required approvals are obtained and required documentation maintained
- Confirm availability of proper funding sources
- Obtain Risk Management authorizations when applicable
- Evaluate the appropriateness and purpose of all expenditures
- Ensure alignment with unit mission and funding source restrictions
- Approve employee-only events and memorial spending within thresholds
- Provide fund source guidance
- Review of compliance with university policies
- Submit taxable gift/award information to Payroll or Central Procurement Accounts Payable team
- Validate student award entries in student systems
- Payroll – Process W2 tax reporting documents and required disclosures (as appropriate)
- Contracts Team - Reviews and executes contracts, as applicable
- Risk Management – Reviews insurance and alcohol-related risk requirements
- Accounts Payable – Process 1099 tax reporting documents and required disclosures (as appropriate)
Policy reference: FN10 Other Business Expenses and Activities - Policy
Funding source selection is a primary internal control and must be determined prior to incurring any expense.
When determining the appropriate funding source, units must apply the following:
- General Funds
- Limited use (mission-critical only)
- Prohibited for donations, most gifts
- Restricted Funds (Grants/Contracts)
- Must follow donor/grant restrictions
- Require verification
- Unrestricted Donor Funds (primary allowable source for)
- Alcohol
- Gifts
- Entertainment
- Endowments
- Must follow donor intent and established spending guidelines
If fund source allowability is unclear, consult the Strategic Finance Partner team prior to incurring expenses.
Policy reference: FN10 Other Business Expenses and Activities - Events
- Events must have a clear business, academic, educational, development, or engagement purpose
- Costs must be reasonable in amount and frequency
- Funding source must align with the purpose of the event
For any University-Sponsored Event:
- Identify event purpose and confirm alignment with policy.
- Determine funding source (general, restricted, or unrestricted donor).
- Request approvals when required:
- Alcohol service
- Executive-hosted employee events
- Student events involving alcohol
- Determine procurement method:
- Purchase Order required for estimated cost ≥ $25,000
- Purchasing card or Non-PO Invoice for < $25,000
- Submit contracts (facility, catering, entertainment) to:
Policy reference: FN10 Other Business Expenses and Activities - Alcohol
- Verify allowable funding source.
- Request permission under Policy AD18 Possession, Use, and Distribution of Alcohol Beverages when on-campus and not in licensed venues.
- Confirm compliance with:
- Responsible Alcohol Management Program (RAMP)-certified bartender requirements
- Insurance requirements for caterers or bartenders
- Time-of-day and cost limits
- For events at residences, ensure host understands liability and insurance implications.
Policy reference: FN10 Other Business Expenses and Activities - Entertainment, Flowers, and Decorations
- Entertainment costs must be charged to unrestricted donor funds
- University-affiliated entertainment is preferred
- Flowers and decorative items for University events are permitted on unrestricted donor funds
- Flowers for commencement exercises may be charged to general funds.
Each event must include:
- Itemized invoices or receipts
- Funding source justification
- List of attendees or groups
- Contract approvals
- Alcohol approval documentation (if applicable)
Policy reference: FN10 Other Business Expenses and Activities - Gifts and Awards
All gifts and awards must comply with applicable University policies, including FN09 Scholarships, Awards, Grants, and FN30 Employee Reward and Recognition Programs. Where requirements differ, the more restrictive policy or funding source limitation applies. This procedure establishes operational guidance but does not override governing policy requirements.
Gifts and awards must meet the following requirements:
- Gifts and awards must align with purpose of the expenditure and the funding source used
- Gifts and awards may not be charged to federal or state grants or contracts
- Cash and cash equivalents (including gifts and gift cards) are taxable to the recipient
- All reportable gifts and awards must be processed in accordance with University tax reporting requirements
- Permitted on unrestricted donor funds or funds designated for the purpose
- Flowers and plants permitted on allowable funds
Gifts, awards, and financial support provided to students must comply with Policy FN09 Scholarships, Awards, and Grants and applicable federal financial aid regulations.
- All student awards, regardless of value, must be evaluated for financial aid impact
- Awards must be recorded in the appropriate student system when required
- Cash awards must be processed through the Student Information System
- Non-cash awards must be evaluated for taxability and reporting requirements
- Funding sources must align with the purpose and allowability of the award
Support must be provided by:
- Direct payment to third parties
- Reimbursement to the student
- Direct award to the student (treated as a scholarship)
Appropriate method must be determined in consultation with the FPAC shared-services team.
Gifts and awards to employees must be administered in accordance with Policy FN30 Employee Reward and Recognition Programs.
- General funds may only be used where explicitly permitted under Policy FN30 Employee Reward and Recognition Programs
- Clothing for identification or business purposes is permitted under cost limits
- Gifts for personal occasions are prohibited
- Equipment or furniture may not be provided as gifts and remain University property
- Units should solicit employee contributions rather than use University funds
- General funds may be used for current employees and students only when the expense is reasonable, appropriate, and approved by the Budget Executive in accordance with University policy
- Unrestricted donor funds may be used for others with documented budget executive approval
- Memorial service costs must be reasonable and approved
- Funding permitted only for Recognized Student Organizations
- General funds require a clear educational purpose
- Equipment or furniture may not be gifts; standard disposition process applies
Policy reference: FN10 Other Business Expenses and Activities - Charitable Contributions
- Direct donations from general funds are prohibited
- Exceptions require written justification and budget executive approval
- Political contributions are prohibited
- Raffles are prohibited except as permitted for Recognized Student Organizations
Policy reference: FN10 Other Business Expenses and Activities - Other Business Expenses
All other business expenses must:
- Support a legitimate University business purpose
- Be reasonable in cost and frequency
- Comply with funding source restrictions
- Not be otherwise prohibited by University policy
- Standard furniture permitted on general funds if reasonable
- Alternative workstations (i.e., standing desks, treadmill desks, etc.) require unrestricted donor funds and budget executive approval
- Office furniture and equipment are University property
- Public area: general funds permitted
- Non-public areas: unrestricted donor funds
- Private offices are generally personal expenses unless approved for University business use
- Office decor purchased with University funds are University property
- Shared appliances permitted on general funds with approval
- Specialty coffee machines and bottled water services are prohibited
- Beverage purchase must comply with University beverage contract/pouring rights
- Required-for-employment licenses are personal expenses
- Continuing education and work-related licenses may be paid by the University
- The University does not reimburse for loss or damage of personal property
Policy reference: FN10 Other Business Expenses and Activities - Risk Management
University-sponsored events and activities must be conducted in a manner that manages risk and protects participants. This includes:
- Compliance with insurance requirements
- Contract review and approval
- Adherence to alcohol-related controls
- Consultation with Risk Management for higher-risk events
Policy reference: FN10 Other Business Expenses and Activities - Gifts and Awards
- Cash: Taxable and reportable regardless of amount (Payroll)
- Non-cash gifts and awards must be evaluated for taxability and reporting in accordance with applicable IRS regulations and University guidance
Non-employee gifts and awards are subject to tax reporting requirements in accordance with IRS regulations
- Payments meeting reporting thresholds must be processed through Central Procurement – Accounts Payable
- Recipients must provide required tax documentation prior to payment
- Units must consult the Controllership – Tax Services team when reporting applicability is unclear
Current IRS reporting thresholds apply and may change; units should not rely on static dollar limits.
Policy reference: FN10 Other Business Expenses and Activities - Non-Compliance
- Violations must be reported to the appropriate Finance Shared Services team
- Transactions may be denied, reversed, or escalated
- Repeated or significant violations may be referred to:
- Internal Audit
- Human Resources
- Office of Ethics and Compliance
- Corrective actions may include training, process changes, or disciplinary action
The business area and Finance shared-services teams are responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The Finance shared-service teams are responsible for collaborating with Internal Audit when audits are being performed in the administrative area. Audits relating to sponsored activities or other audits performed by external auditors may also be performed. The Finance shared-services teams would also be responsible for collaborating with the external auditor and/or a central university office related to these procedures.
University Records retention must be managed in accordance with Policy AD35 University Archives and Records Management, and Records Retention Schedules.
Additional questions may be directed to the Office of Records Management.
For questions or additional details, please contact the relevant Finance Shared Services team.
To request changes to this procedure, please contact the Policy and Procedure Office by submitting a Technical Support Request form.
May 5, 2026
- May 5, 2026 - new procedure
