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HomeMy WebLinkAboutE-7 Revise Business Expense Reimbursment PolicyAdoption of Business Expense Reimbursement Policy February 5, 2018 Page 1 CONSENT ITEM E-7 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: DON PENMAN, INTERIM CITY MANAGER FROM: TALIKA M. JOHNSON, DIRECTOR OF FINANCE DATE: FEBRUARY 5, 2018 SUBJECT: ADOPTION OF UPDATED BUSINESS EXPENSE REIMBURSEMENT POLICY SUMMARY: As required by Assembly Bill 1234, Local Agencies: Compensation and Ethics (“AB1234”), the City has an existing Business Expense Policy (“Policy”) which provides a uniform policy and procedures for reimbursing employees for all necessary and actual expenses incurred while on and/or conducting official business for the City. Staff is proposing revisions to the Policy in order to enhance administrative efficiencies in the reimbursement process. The revised Policy must be adopted by the City Council. RECOMMENDATION: Staff recommends the City Council take the following action: 1) Adopt a revised Business Expense Reimbursement Policy and Procedures. DISCUSSION: In order to improve administrative efficiencies, Staff is proposing revisions to the City’s existing Business Expense Policy (“Policy”) which provides a uniform policy and procedures for reimbursing employees for all necessary and actual expenses incurred while on and/or conducting official business for the City. Revisions include: 1)Replacing the requirement of itemized meal receipts when employees request reimbursement at the per diem rates for Los Angeles County in accordance with U.S. General Services Administration (GSA). Limits applicable for the dates of travel with a Meal Purchase Affidavit for eligible employees– using per diem rates will reduce Staff time spent preparing reimbursement requests when receipts are lost or faded. APPROVED CITY COUNCIL 2/5/2018 Adoption of Business Expense Reimbursement Policy February 5, 2018 Page 2 2) Reducing the amount of time in which an employee has to submit reimbursement requests – this is especially important during the year end closing process in which Finance Staff has a limited amount to record expenses in the appropriate fiscal year in order to close the books. 3) Making clearer that City issued credit cards must be used when booking transportation and lodging – the City receives rebates for its credit card purchases and therefore, use of employee’s personal credit cards is discouraged unless unavoidable. As required by Assembly Bill 1234, Local Agencies: Compensation and Ethics (“AB1234”), the revised Policy must be adopted by the City Council. FISCAL IMPACT: There is no fiscal impact associated with the proposed recommendation. Prepared by: Reviewed and Approved: Talika M. Johnson Louie F. Lacasella Director of Finance Senior Management Analyst Reviewed and Approved: Don Penman Interim City Manager Attachment: 1) Redline copy of the Business Expense Reimbursement Policy and Procedures Updated 9/26/20178/22/201710/16/2017 A - 1 BUSINESS EXPENSE REIMBURSMENTS - POLICY AND PROCEDURES Effective: 12-18-06012/675/2018 I.PURPOSE To provide a uniform policy and procedure for reimbursing employees for all necessary and actual expenses incurred while on and/or conducting official business for the City of Azusa. To assure the appropriate use of City funds, provide accountability of related expenditures, ensure an efficient process for approval and proper adherence to IRS regulations. II. POLICY Professional conferences, training sessions, meetings and other City business for City employees is vital in keeping employees up-to-date with new laws and practices, and enhance the City’s ability to improve existing services and implement new services for the benefit of the community. Therefore, City employees will receive reimbursement, or have direct payments made on their behalf, of appropriate expenditures incurred while on approved and authorized City business. Travel expenditures for a family member are not eligible for reimbursement. Every City Employee/Official should reimburse the City for any additional travel costs associated with his or her spouse or other personal guests. This includes any meal costs and travel expenses. Should a member of Council or an Executive of the City believe that there is a legitimate benefit to the City for payment of travel expenses incurred by a guest of the Council member or Executive, then a separate “Accountable Expenses” form should be completed for each guest to clearly identify the costs associated with his/her travel and the possible benefit to the City, subject to an independent review and approval by the City Manager. In case of doubt as to the necessity for the incurring of any expense, the Department Head, Administrative Services Director/Chief Financial OfficerDirector of Finance, or City Manager shall determine whether the expense is appropriate and may allow, deny or modify any claim or item thereof. III.PROCEDURE Attachment 1 Updated 9/26/20178/22/201710/16/2017 A - 2 A. Overnight Trips 1. A “Travel Advance” form must be submitted to Finance no later than 14 days prior to the trip. The “Travel Advance” funds will be made available no sooner than 3 business days prior to travel. 2. Overnight and Out-of-State trips require the prior written approval of the City Manager even when no advance of funds is being requested. B. Local Trips 1. Local travel must be completed on the same workday. Only auto and metro/train travel are authorized for these trips unless otherwise pre-authorizedapproved by the City Manager. C. Accounting for Expenses 1. Expenses must have been paid or incurred while on official City business. 2. ALL expenses, including required forms and receipts, must be accounted for within 60 days. 3. A copy of the brochure or flyer announcing the event must be submitted. 3. If the standard meal allowance advancement is utilized by the employee, then the only receipts required to be submitted are for lodging and other expenses that may require reimbursement. 4. Expenses must be itemized and substantiated with the amount, date, place, business purpose and names of the individuals for which an expense was incurred. Original receipts for all expenses must be submitted. If the standard meal allowance is utilized and the Meal Purchase Affidavit is submitted, the employee is still required to submit receipts for lodging and other expenses (meal receipts are required if a Meal Purchase Affidavit is not submitted). Failure to submit required receipts may result in the denial of reimbursement and/or future advances. If the standard meal allowance advancement is utilized by the employee, then the only receipts required to be submitted are for lodging and other expenses that may require reimbursement. 5. In the event that no cash advance was issued, the employee must submit an approved "Accountable Expenses" form for local travel. 6. A “Travel and Meeting Reconciliation” form must be completed after each overnight trip or those of 50 miles or more with receipts attached verifying such trip and expenses within 8 working days after date of return. The form will list any and all costs of the trip regardless of how paid. The following is an excerpt from the IRS Travel, Entertainment and Gift Expenses Regulations: To be an accountable plan, the reimbursement or allowance arrangement must include all three of the following rules: Updated 9/26/20178/22/201710/16/2017 A - 3  Your expenses must have a business connection; that is, you must have paid or incurred deductible expenses while performing services as an employee of the City.  You must adequately account to the City for these expenses within a reasonable period of time.  You must return any excess reimbursement or allowance within a reasonable period of time. The IRS considers a reasonable period of time for an employee to (a) adequately account for and request reimbursement for theiryour expenses paid or incurred to be within 60 days after paid or incurred.; The Finance Department reserves the right to reject reimbursement requests submitted after the 60 day period. A reconciliation of and (b) return any excess reimbursement advances must be provided to Finance staff within 60120 days after the travel and meeting event has occurred.expense was paid or incurred. The employer is obligated to report unreconciled advancesexpenses or unpaid reimbursements and unpaid excess advances as earnings onin an employee’s W-2.. The Finance Department reserves the right to reject travel and meeting reconciliations submitted after the 60 day period. D. Reports Concerning attendance at Conferences, Training, and Meetings Attendees shall provide a summary report on materials and subject information of importance to their Department Head or City Manager as appropriate. IV. GUIDELINES A. Transportation Reimbursement of transportation expenses to a meeting or conference shall be on the basis of actual cost. Reimbursement for the portion of travel or transportation that exceeds the distance normally traveled by the employee from home to established work location will be reimbursed. Air Travel Reservations for air travel should be made well in advance to take advantage of available discount fares. The amount shall not be more than the standard ‘coach’ fare. Air travel reservations must be paid for using a City issued credit card. Travel to and from the airport will be reimbursed when travel is via personal vehicle or shuttle. Taxi fare is approved if it is the only practical transportation available. Parking costs at the airport will be reimbursed at ‘economy lot’ daily rates. However, limousinecar/shuttle service to the airport should be used if it’s more economical than the projected parking costs. Updated 9/26/20178/22/201710/16/2017 A - 4 Automobile Allowance A monthly auto allowance is provided to various individuals. This is intended to include all travel within a 50-mile radius of City Hall. When authorized vehicle travel falls outside this range, mileage will be reimbursed at the authorized City rate, which is based on IRS standard mileage rates for business, (which is determined by Finance) for the amount of mileage exceeding the 50-mile range. A “Mileage Reconciliation” form must be filled out to calculate reimbursable mileage and accompanied with a printout (such as MapQuest or Google Maps) validating the mileages reported. City Vehicles With approval from the Department Head and City Manager, an employee may be assigned a City-owned vehicle to attend business meetings or conferences. The use of City fuel is permitted, otherwise the reimbursement of actual gasoline costs will be made. All usage of City vehicles must be( in accordance with the City’s vVehicle uUse Ppolicy.) Personal Vehicles An employee who does not receive an auto allowance who chooses to drive his or her personal vehicle to a meeting or conference shall be reimbursed. The employee shall be reimbursed for mileage in accordance with authorized City rates, which is based on IRS standard mileage rates for business, in effect at the time of travel, as well as for required parking costs. When traveling from home to a meeting or conference, the total number of miles traveled should shall be reduced by the employee's commuter mileage. Commuter mileage is the total number of miles normally traveled to and from work. When traveling from work to a meeting or conference and returning to work, the round trip mileage is reimbursable. However, if you leave the meeting or conference and return to your home, the total number of miles traveled shall be reduced by the employee's commuter mileage normally traveled from work to home, making any excess, if any, reimbursable. A “Mileage Reconciliation” form must be filled out to calculate reimbursable mileage and accompanied with a printout (such as MapQuest or Google Maps) validating the mileages reported. Updated 9/26/20178/22/201710/16/2017 A - 5 Rental Car Utilization of a rental car is permissible if the circumstances show it is the only practical means of transportation. Renting the vehicle requires the approval of the Department Head and the City Manager. Reimbursement of the rental vehicle will be at the mid-size sedan rate. Other Modes of Travel Bus, train or other method of travel will be authorized when special circumstances justify that they are more appropriate and economical. B. Lodging 1. Lodging for authorized meetings or conferences that are conducted at a location, which is more than 50 miles from the employee’s residence, will be paid on the basis of actual cost, including tax. If such a business conference meeting or seminar is scheduled to begin prior to 9:30 a.m., the attendee may be allowed to begin the trip one day earlier, with costs for the extra day paid by the City, upon approval of Department Head/City Manager. If such a business conference, meeting or seminar is scheduled to end after 4:00 p.m., the attendee may be allowed to end the trip one day later, with costs for the extra day paid by the City, upon approval of Department Head/City Manager. In either case, the extra night(s) need not be spent at the conference hotel or in the conference city, but the traveler must ensure that he or she is on time for and attends the entire conference, meeting or seminar. 1.2. In some cases, the City Manager may approve overnight lodging for meetings and conferences that are conducted at a location which is less than 50 miles from the employee’s residence if the meeting or conference is attended for more than one consecutive day and results in a burdensome daily commute time for the employee. 2.3. The cost of accommodations shall be based on the lowest available single room rate of the conference headquarters’ hotel. If suitable accommodations are not available at this location or in the immediate area of the conference, the room rate must be approved by the Department Head. Whenever possible, theThe traveler must utilize their Department’s City issued’s credit card should be utilized for lodging. The lodging receipt must be submitted with the “Travel and Meeting Reconciliation” form, whether or not the bill has been paid directly by the City or charged to a City bank issued card. 3. Personal charges are the responsibility of the employee, including, but not limited to, the cost of in-room service snacks, in-room movies, or iInternet access charges for personal/non-business use. 4. Updated 9/26/20178/22/201710/16/2017 A - 6 5. Business related phone calls are eligible for reimbursement on an actual cost basis. When possible, it is encouraged to make use of City assigned cellular phones for business calls. A- 7 Updated 1/22/2018 C. Meals Reimbursement of meal expenses (breakfast, lunch, dinner, and incidentals) shall be on the basis of based on per diem rates for Los Angeles County in accordance with U.S. General Services Administration (GSA) limits applicable for the dates of travel, which includes gratuities paid. GSA per diem rates can be found here: https://www.gsa.gov/portal/category/26429. City employees and officials required to file FPPC Form 700 shall be required to submit actual receipts documenting meal expenses to be reimbursed at the lesser of actual costs or the per diem rate prescribed above. All others employees must provide a signed “Meal Purchase Affidavit” form certifying their per diem meal allowance was in fact used to purchase meals. Reimbursements for actual cost. Whenever possible, meals will not be granted if meals are that are hosted or otherwise provided as part of the meeting or conference package should be utilized to save costs. Overnight Trips Based on the authorized City rate, tThe City’s standard meal allowance advancement is $645.00 per day and subject to change in accordance with U.S. General Services Administration (GSA) limits applicable for the dates of travel. GSA per diem rates can be found here: https://www.gsa.gov/portal/category/26429.Should the maximum amount not be used each day, the remaining balance will be returned to the City by the employee, along with the required receipts. In the event meals are included in the registration fee, or when three meals are not required during partial days of travel, reimbursement shall be reduced for such items. If the traveler wishes to be reimbursed for meal costs higher than the per day diem amount, the additional amount must be approved by the Department Headthe Director of Finance or the City Manager and itemized receipts must be submitted with the reimbursement request. The City Manager mustshould approve meal reimbursements in excess of per diem rates$80.00 per day of for Department Heads and Council members. Although reimbursements for undocumented expenses above the City’s standard meal allowance authorized rate will be considered and may be made, they will be processed through the payroll system and included in the traveler’s taxable income. Miscellaneous Business Meals Expenses With prior Department Head approval, reimbursement for meal expenses that may be required as an incidental part of conducting City business shall be made on the basis of actual cost, including tax and tip (not to exceed 20%), and subject to budget availability. A receipt is required with the request for reimbursement and must include the business purpose and names of the individuals in attendance. A- 8 Updated 1/22/2018 D. Incidental Expenses Incidentals shall be reimbursed on the basis of actual cost. 1. The term "incidental expenses" includes, but is not limited to, business telephone calls, local ground and airport transportation, and parking fees. 2.1. 3.2. Reasonable expenses incurred for business services, including, but not limited to, Internet access, copies and fax services will be reimbursed should these functions be directly related to City business. 4.3. Items of a personal nature are not reimbursable, including but not limited to: alcoholic beverages, fines or traffic violations, spouse or guest accommodations, gambling expenses, room or flight upgrades, movies or other entertainment, and tips in excess of reasonable standards. Non-allowable items will be deducted before payment to the employee. 5.4. Employees are reminded to be reasonable and prudent and to keep incidental costs to a minimum. 6.5. Expenses for Business Meeting food and beverages shall be reimbursed on the basis of actual costs incurred. The IRS rules require that a record be maintained for entertainment expenses, which indicates the amount, the date, time and place, the business relationship of persons entertained and the nature of the business discussion. Receipt/s should accompany the request for reimbursement. E. Memberships, Training and Subscriptions Job-related memberships, training and subscriptions are reimbursable and typically paid directly to the vendor by the City. For reimbursement of this type of expense paid directly by the employee, prior Department Head approval is required and an approved payment demand must be submitted to Finance, with proof of payment by the employee. Acceptable receipts include cancelled checks, vendor receipts or credit card receipts itemizing purchases. The City Manager reserves the right to grant exceptions subject to budget control. This policy shall apply to the entire City complement, including members of the City Council.