University of Houston-Victoria
Policies

Entertainment, Discretionary and Reimbursement of other Business Related Expenses

Section: Fiscal B-9

Policy

The University recognizes that business entertainment and other discretionary expenditures can be essential to the operation of the University. However, it is critical to place these activities in proper perspective, prevent abuse, and ensure compliance with all University, state, and federal regulations governing these expenditures and use of University funds. This policy issues guidelines to ensure prudent control of these expenditures.  These guidelines apply to all funds of the University, except State Appropriated Funds, which cannot be expended for entertainment expenses under any circumstances. (UH System Administrative Memorandum 03.A.02, Entertainment Expenditures)

This policy also provides guidelines for reimbursement of other business related expenses; these reimbursements may only be made from Local Funds; State Appropriated Funds cannot be used.

For the purpose of this policy, students will be considered either a student or an employee (student worker) concerning the allowability of an expense depending upon the role in which they are attending or participating in the entertainment.

Definition

Discretionary Expenses:  Those expenditures not directly related to the University educational, research, and public service mission.

Entertainment Expenses:  Expenditures for food, beverages, tickets for shows or athletic events, services provided for entertainment purposes (e.g., musicians), and related supplies for events which involve one or more University employees and/or one or more guests.

Local Funds:  Generally, funds that are not appropriated to the University by the legislature; usually have less purchasing restrictions than state appropriated funds. Restrictions on grants may supersede normal University guidelines for local funds; agency funds (fund 9) generally have no purchasing restrictions.

Sponsorship:  Funding provided for a specific event or function that is planned, hosted and sponsored by an outside entity where the University receives recognition for the sponsorship.  May or may not include an entertainment benefit such as meal tickets.

State Appropriated Funds: Funds appropriated by the Texas Legislature in the General Appropriations Act, whether held inside or outside the State Treasury. These funds include general revenue, special line items, HEAF funds, and other funds designated as state funds.

Procedures

REQUIRED APPROVALS

Use of University funds for entertainment shall be restricted to occasions that can be demonstrated to be of clear benefit to the University and shall be limited to those whose attendance is deemed necessary to that benefit.

Reimbursement of entertainment, discretionary and other business related expenses must be approved by an administrative superior.  See UHV Policy B-1, Expenditures and Use of Funds.  In every case, an entertainment reimbursement must be approved by the official in higher authority than the highest ranking person of the sponsoring group who is in attendance at the event. All reimbursements to the President, whether considered entertainment-related or not, will be reviewed and approved by the Chancellor or designee.

CATEGORIES OF ENTERTAINMENT AND DISCRETIONARY EXPENSES

Detailed descriptions of common entertainment and discretionary expenses and the funds from which these expenses can be paid are provided below.  Please see the UHV Expenditure Guide for Entertainment and Discretionary Expenses for quick reference.

Entertainment Primarily Involving Students:  The University frequently hosts events primarily involving students or prospective students to promote student life or encourage recruitment. Such events generally may be paid or reimbursed from Designated Funds, Designated Student Fee Funds, Auxiliary Student Fee Funds, Discretionary Funds, donated funds restricted for such purpose, such as Unit of Excellence funds, or Sales and Services Funds. 

Entertainment of Prospective Faculty and Staff:  It is the policy of the University to invite prospective faculty and staff, and on occasion both candidate and spouse, to visit the University. Entertainment expenses for such activities generally may be paid or reimbursed from Designated Funds, Designated Student Fee Funds, Auxiliary Student Fee Funds, Discretionary Funds, donated funds restricted for such purpose, such as Unit of Excellence funds, or Sales and Services Funds. 

Entertainment of Official Guests of the University:  The University is not normally expected to reimburse official guests for entertainment expenses except when guests travel to the University on specific invitation. However, it is recognized that entertainment of guests is essential. Examples of official guests would include donors and potential donors, visiting lecturers and scientists, visitors from other universities, individuals interested in University programs or issues, guests invited to assist in the development of new programs or evaluate existing ones (both paid and non-paid consultants), and business and community leaders from Victoria, the Gulf Coast region, and the State at large. The relationship between the visitor and the University faculty and staff attending the function for their areas of responsibility must be clearly documented in the description.  Entertainment expenses for such activities generally may only be paid or reimbursed from Discretionary Funds, donated funds restricted for such purpose, such as Unit of Excellence funds, or Sales and Services Funds. 

Receptions:  Receptions for the students, faculty, staff, alumni and friends of the University held by the President or designee may  be paid as entertainment from Auxiliary Student Fee Funds, Discretionary Funds, donated funds restricted for such purpose, such as Unit of Excellence funds, or Sales and Services Funds.    

If such events are for employees only, further restrictions apply.  If the event is for employee appreciation, professional achievement or service recognition, expenses may be paid with donated funds restricted for such purpose, such as Unit of Excellence Funds.   However, if the event is University-wide or division-wide and the additional documented advance approval of the President or Vice President for Administration & Finance (VPAAF) is obtained, expenses may also be paid from Discretionary Funds.  An exception is the monthly University-wide birthday parties hosted by University departments, which may be paid with Discretionary Funds without the President’s or VPAAF’s specific approval.  Expenses for any other such events in recognition of personal events, such as birthdays, weddings, births, or anniversaries are prohibited from all funds. 

Conferences, workshops, meetings, seminars, etc:  In the case of conferences and workshops conducted by the University which are supported by income from registration fees, all expenses, including entertainment, must be covered with the revenue produced by the event.  Expenses must be recorded in the same cost center as the revenue from the event, generally a sales and services cost center (fund code 2078, 2080 or 3056). 

For meals (breakfast, lunch or dinner) provided at such events where revenue does not cover expenses, see the guidance for Business Meals.  For refreshments provided at such events where revenue does not cover expenses, see Refreshments.

Refreshments: Light refreshments such as drinks, candy and snacks at employee trainings or meetings or in department breakrooms may only be paid or reimbursed from Discretionary Funds or donated funds restricted for such purpose, such as Unit of Excellence Funds.  Meals provided (breakfast, lunch, or dinner) are not considered refreshments and are addressed under Business Meals.  For refreshments other than primarily for employees, see guidance under Entertainment. 

Business Meals:  Business meals are considered a form of entertainment in which a University employee discusses component university business with another System employee and/or non-employee over breakfast, lunch or dinner. The business meal must be considered an ordinary and necessary expense and meet the directly-related or associated test, as described in IRS Publication 463, Travel, Entertainment, Gift and Car Expenses.

Payment/reimbursement to the employee is limited to business meals for those whose attendance provides benefit.  Business meals must be accounted for by the employee who charged or paid for the expense; the employee has to have incurred an expense for the meal to be reimbursed. Business meals may not be considered lavish or extravagant under the circumstances.

Business meals attended by System personnel from another component university or other guests of the University will be handled in the same manner as entertainment of official guests of the University.  Business meals limited to University personnel generally may only be paid from donated funds restricted for such purpose, such as Unit of Excellence funds.  However, Discretionary Funds may be used for business meals limited to University personnel if:

  • Documentation is provided demonstrating that the meeting, workshop or conference is essential to the operation of the University, is ongoing before and after the meal, and the provision of the meal and/or refreshments will expedite the proceedings, and
  • Such documentation is provided to and approved in writing by either the President or VPAAF in advance of the meeting, workshop or conference.

If a business meal is incurred during travel, an employee should not request full per diem for the travel meal for that day.  Individual travel meals are not considered business meals or entertainment, but should be paid or reimbursed as a travel expense.  Meal expenses for one-day trips (non-overnight travel) are not considered travel expenses and are not reimbursable.  However, meals included in registration fees for one-day events paid or reimbursed by the University are allowed.  Refer to UHV Policy F-5, Travel Arrangements, and UHV Policy F-1, Reimbursement of Travel, for travel expense guidelines.

Alcoholic Beverages:  Expenditures for alcoholic beverages are allowed from the Representation Allowance allocated to the President by the UH Foundation or from funds generated by a fundraiser in a cost center not under the control of the Athletic Department. Expenditures for alcoholic beverages may also be paid from Unit of Excellence funds if for entertainment of prospective employees, University guests, or System personnel from another component University.   All other expenditures for alcoholic beverages are prohibited.  If alcoholic beverages are served, the time that the alcohol is served is also required, since employees may not consume alcoholic beverages during normal business hours. (UH System Administrative Memorandum 03.A.25, Representation Allowance, UH System Administrative Memorandum 03.A.02, Entertainment Expenditures).

Gratuity:  For transactions that normally require gratuity, employees may be reimbursed or pay for gratuity up to 20% of the associated transaction. 

Sponsorships: The value of meals or other entertainment benefit received may only be paid or reimbursed from Discretionary Funds or donated funds restricted for such purpose, such as Unit of Excellence Funds.  The remainder of the purchase may be paid as promotional expense from any applicable fund source except for State Funds.  If the non-deductible value of the meals or entertainment is stated for income tax purposes, that value should be used for the portion allocated to entertainment.  If the value is not stated, a reasonable value ($15-20 per meal) should be used.

Flowers:  A standard arrangement of flowers may be sent on behalf of the University for the loss of a UHV employee, close associate of the University, significant supporters of the University, or certain family members of such persons under the guidance of UHV Policy A-28, Condolences and Congratulations and paid from the President’s cost center for this purpose. 

Flowers at a cost not to exceed $50, including delivery charges, may also be purchased from Unit of Excellence funds if:

  • Sent to employees, close associates, or significant supporters of the University who have lost a spouse, child, parent, or sibling, or,
  • Sent to employees for employee appreciation, professional achievement, or service recognition.

Flowers for any other purpose, such as in recognition of personal events (birthdays, weddings, births, anniversaries, etc.), or from any other University funds, are not allowed expenditures.

Contributions:  Contributions to charities or others are not an allowable expenditure from any University funds including donated funds such as Unit of Excellence funds.  As a state agency, the University is prohibited from using public funds for such purposes. (Texas Constitution, Article 3, Section 52 (a)).  However, University funds may be reallocated within the University for a specific memorial or congratulatory purpose, such as a department transferring existing funds for a memorial UHV scholarship or for a UHV brick or a book for the UHV Library in recognition of a retirement.   

Contributions differ from sponsorships, which are an allowable expenditure of funds, in that a substantial return benefit, such as advertising for the University, is received from a sponsorship.  This distinction is based on the actual documented benefit and purpose to the University rather than the term used in the solicitation. 

Prizes, Gifts and Awards:  Prizes, gifts, or awards for students may be paid or reimbursed from Designated Funds, Designated Student Fee Funds, Auxiliary Student Fee Funds, Discretionary Funds, donated funds restricted for such purpose, such as Unit of Excellence funds, or Sales and Services Funds.  Prizes, gifts, or awards for non-employees, such as University guests, donors or others, may be paid or reimbursed from Discretionary Funds, donated funds restricted for such purpose, such as Unit of Excellence funds, or Sales and Services Funds.  If a department provides prizes, gifts or awards to a non-employee totaling over $600 in a calendar year, the department is responsible for insuring that the non-employee is set up as a vendor and reported to UH Accounts Payable in a timely manner so that the taxable income can be properly reported to the Internal Revenue Service.   

Prizes, gifts or awards for employee appreciation, professional achievement or service recognition may generally only by paid or reimbursed from donated funds restricted for such purpose, such as Unit of Excellence Funds.  However, token gifts for employee bearing the UHV logo valued at $10 each or less may also be paid from Discretionary Funds.  In addition, prizes, gifts or awards for years of service or other service recognition selected in a University-wide process under the guidance of the Human Resources department, such as Employee of the Month, may also be paid from Discretionary Funds.  Expenses in recognition of personal events, such as birthdays, weddings, births, or anniversaries, are prohibited from all funds.  Gifts and awards may be considered fringe benefits that are taxable to the employee; see General Office Procedure 3.7, Taxable Fringe Benefits.

Memberships:  See UHV Policy A-11, Memberships, for guidance.

SOURCES OF PAYMENTS FOR ENTERTAINMENT AND DISCRETIONARY EXPENSES

Expenditures are restricted based on the source of funding, which is determined by the fund code of the cost center used to pay the expenditure.  For optimal budget management, it is prudent to utilize the most restricted funds first.  The UHS Account List provides certain system-wide restrictions on use of certain account codes with certain fund codes.  The following funds have particular restrictions on entertainment and discretionary expenditures:

  1. State Appropriated Funds: Funds appropriated to the University by the Texas Legislature (fund code 1xxx).  Not allowed for reimbursement or direct payment of entertainment or discretionary expenses.
  2. Designated Funds: Funds collected from students for designated tuition (fund code 2064). Department “M&O Funds” are Designated Funds.  Not allowed for entertainment or discretionary expenses except for events that primarily involve students or prospective employee business meals. 
  3. Designated Student Fee Funds – Funds from certain fees charged to students such as Library Fees and Extended Access & Support Fees (fund code 2063). Not allowed for entertainment or discretionary expenses except for events that primarily involve students or prospective employee business meals. However, if the funds are from a specific fee and it is clearly demonstrated that the expense is directly related to the purpose of the fee charged, the expense may be allowed.
  4. Discretionary Funds – Funds generally from investment earnings (fund code 2077, 3054). Used for expenditures not directly related to the University educational, research and public service mission. 
  5. Auxiliary Funds – Funds from auxiliary enterprise operations (fund code 3xxx). Such operations furnish goods or services to students, faculty, staff, or others, and charge an amount directly related to, although not necessarily equal to, the cost of the goods or services. Expenditures from auxiliary funds are generally less restrictive than other Local Funds and should include the cost of goods or services provided.
  6. Auxiliary Student Fee Funds: Funds from auxiliary student fees such as Student Service Fees and Student Center Fees (fund codes 3048, 3049, 3050).  Expenditures are generally less restrictive than Designated Student Fee funds but must be related to the purpose of the specific fee charged. 
  7. Sales and Services Funds – Funds derived from the sale of goods or services (fund codes 2078, 2080, 3056). The cost of expenses to provide sales and services generally must be recorded in the same cost center as the revenues.
  8. Restricted Funds – Funds from an external source other than a grant or contract whose use is limited as specified by the external source, generally a gift or endowment (fund code 4xxx). Restrictions vary based on the donor’s stipulations; refer to documentation of the donor’s intent for specific requirements. 
  9. Unit of Excellence Funds – Restricted gifts donated by staff or faculty for the purpose of showing support and appreciation for the staff, faculty or operations of a particular department at the discretion of the Senior Administrative Official of that department (certain fund code 4041 cost centers). However, expenditures from such funds must be reasonable and necessary for carrying out the programs and activities of the University and have a clearly substantiated benefit and purpose.  Since donations to the University are considered tax-deductible contributions, Unit of Excellence funds still must be used for the University’s tax-exempt educational purpose, which encompasses ordinary and necessary business expenses such as employee appreciation, professional achievement or service recognition.  Expenses in recognition of personal events, such as birthdays, weddings, births, anniversaries, illnesses, or a death in the family are generally prohibited.
  10. Sponsored Project/Grant Funds – Funds received from outside sources that require a deliverable as a result of the funding (fund code 5xxx). Restricted by the funding agency to be expended only in support of the funded project.  No entertainment or discretionary expenses can be charged to these funds unless such entertainment or discretionary expense is specifically authorized by the terms of the sponsored project or grant. All expenditures must have the additional approval of the UHV Office of Research and Sponsored Programs; contact their office for guidance on allowed expenditures. 

REIMBURSEMENT OF OTHER BUSINESS EXPENSES

Other business expenses can include employee reimbursement for the purchase of goods or services necessary for ongoing operations. For example, this can include miscellaneous office supplies, small tools, copy services, etc. Reimbursement can only be made from local funds; state funds cannot be used. All employee reimbursements must be approved by an administrative superior. Grant funds may be used if the grant provides for that type of purchase. Itemized receipts are required for reimbursement and the voucher must include the purpose or intended use of each purchase. Purchasing guidelines must be followed regardless of whether an employee requests reimbursement or the University makes payment directly to the vendor providing the goods or services. Reimbursements for refreshments for internal business meetings are considered entertainment reimbursements and are subject to entertainment guidelines.

DOCUMENTATION STANDARDS

Reimbursement vouchers and ProCard transaction documentation should include an itemized detailed receipt verifying payment.  Reimbursement vouchers should also include a Business Expense Reimbursement Report.  If payment is to be made to a vendor, the original invoice is required.

Entertainment expenditures must be documented to show the following:

  • Who:  Identification of the persons or group entertained. If a small group is being entertained (ten or fewer), the names of all persons attending will be shown in the description. For large groups, only the name or names of the honored guests will be shown along with the number of persons attending.
  • What - Purpose and Benefit:  A statement must be included indicating what type of event occurred, how the entertainment benefited the University and clarifying the relationship of the persons in attendance to the particular aspects of the University's programs or activities which will be benefited. (Titles, committee name, field of interest of person being entertained, reason for visitor being on campus, etc.)
  • When and Where: The time, date and place of entertainment.
  • If alcoholic beverages were served, the time that alcohol was served is also required, since employees may not consume alcoholic beverages during normal business hours. Refer to UHS Administrative Memorandum 03.A.02 for additional requirements.

Reimbursement will not be made for entertainment or other business expenditures unless the documentation and proper approvals are complete. Reimbursements that cannot be properly documented or justified will not be paid, and the individual faculty or staff member must bear the cost of the expense.

DEADLINE FOR SUBMISSION OF REIMBURSEMENTS

Employees must submit their requests for reimbursement of entertainment expenses, including the required documentation, to the department personnel responsible for voucher preparation no later than 60 days after the day the expense was incurred.  Requests for reimbursement of other business expenses must be submitted to the department personnel responsible for voucher preparation no more than one calendar year after the date that the expense was incurred.

Requests for reimbursements submitted after the above deadlines may not be forwarded to Finance for reimbursement unless documentation of approval by the appropriate Vice President is included with the request. 

Department personnel responsible for voucher preparation should make every effort to submit vouchers for entertainment and other business expense reimbursements to Finance as soon as possible, but no later than 15 days following receipt of all required documentation from the employee. 

In accordance with the Internal Revenue Service accountable plan requirements, as described in IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses, all reimbursement requests submitted to the department personnel responsible for voucher preparation after the above deadlines will be treated as a taxable fringe benefit to the payee.  These vouchers must be routed in workflow through the UH Tax Department and must include a completed Exhibit B, Taxable Payments or Reimbursements to Employees Form as additional documentation.

PAYMENT METHOD

Payments to employees for reimbursement of entertainment and other business related expenses incurred on behalf of the University must be made by direct deposit.  Per State Government Code § 403.0551, Deductions for Repayment of Certain Debts or Tax Delinquencies, the University, as a state agency, is prohibited from making a payment for reimbursement of expenditures if the payee has an indebtedness or tax delinquency to any state agency until such indebtedness has been satisfied.

Supporting Documents

  1. State Government Code § 403.0551, Deductions for Repayment of Certain Debts or Tax Delinquencies
  2. Texas Constitution, Article 3, Section 52 (a)
  3. IRS Publication 463, Travel, Entertainment, Gift and Car Expenses
  4. UH System Administrative Memorandum 03.A.02, Entertainment Expenditures
  5. UH System Administrative Memorandum 03.A.25, Representation Allowance
  6. UHS Account List
  7. Exhibit B, Taxable Payments or Reimbursements to Employees Form
  8. UHV Policy A-11, MembershipsUHV Policy A-28, Condolences and Congratulations
  9. UHV Policy B-1, Expenditures and Use of Funds
  10. UHV Policy F-1, Reimbursement of Travel
  11. UHV Policy F-5, Travel Arrangements
  12. Expenditure Guide for Entertainment and Discretionary Expenses(Available on UHV Intranet)
  13. General Office Procedure 3.7, Taxable Fringe Benefits (Available on UHV Intranet)
  14. UHV Office of Research and Sponsored Programs (Available on UHV Intranet)
  15. Business Expense Reimbursement Report (Available on UHV Intranet)

 

Approved by:

Signature Obtained                11/08/2019
Robert K. Glenn, Ph.D.           Date
President

Next Review Date:     11/08/2022
Origination:               Finance Department