| Changing Travel and Entertainment (T&E) Policies: Higher Level Approval Requirement |
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March 3, 2009,
Volume 55, No. 24
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In response to increasing external scrutiny of non-profit and higher education activities, including expense reimbursements, “higher level approval” was required effective July 1, 2008. Higher level approval is a ‘best practice’ reimbursement control that generally requires a supervisor to authorize the incurrence of the expense, ensure policy compliance, and sign and document their authorization and approval on the reimbursement form. In the case of academic staff, higher level approval is generally performed by the appropriate academic personnel that are most familiar with the business purpose of the reimbursement (e.g. Department Chairs, Deans).
Higher level approval is considered a strong business practice that will promote a control and cost conscious culture in which the travelers, administrators and the higher level approvers work collaboratively to:
• Ensure that reimbursements are limited to reasonable expenses that are necessary to meet Penn’s academic mission requirements in accordance with Penn policies and procedures
• Ensure timely submission of properly approved and documented reimbursement requests for processing
• Prevent fraud and abuse
• Meet external documentation requirements including those required for IRS compliance. Improperly documented reimbursements, including authorization and approval, could result in personal tax implications to the traveler and corporate tax implications to Penn.
Each school and center has been establishing a hierarchy of responsibility for preparation and approval of T&E reimbursements, including requests for cash advances. This process has taken longer than originally anticipated. To avoid reimbursement delays, the Individual Disbursement Services Group (IDS), has been processing reimbursements without enforcing the new higher level approval requirement.
In addition, Individual Disbursement Services conducted an analysis of expense reimbursements and the average cost per reimbursement to determine if there was a way to reduce the additional administrative time required by higher level approvers. They determined that higher level approval can be limited to T&E expenses related to the same trip or event that equal or exceed $500. The $500 threshold is expected to reduce the number of T&E reimbursement forms requiring higher level approver signature by nearly two-thirds while still promoting the desired control and cost conscious culture.
As a general rule, reimbursements of $500 or more will require three signatures: 1) the traveler, 2) the TAC holder, and 3) the higher level approver. If you are not sure about the approval hierarchy in your school or center, or the definition of the higher level approver please contact your senior financial officer.
The requirements for higher level approval on Advance Justification Forms (C-7A) and T&E Reimbursement Justification Forms (C-5) are not affected by this threshold and will still require higher level approver signature. Higher level approval of all cash advances is important to ensure that they are necessary (incidental reimbursable cash expenses should not be advanced) and are limited to circumstances where other alternatives are not available and to mitigate the related high control risk. In addition, reimbursements to Vice Presidents, Officers, Deans of the Schools and Directors of the Resource Centers, which are subject to a separate external audit, still require higher level approval regardless of the amounts involved.
This change to the policy is effective May 1, 2009. As in the past, school/center personnel must work collaboratively to ensure compliance with this and other policies before submission to IDS for processing. All Travel & Entertainment forms (C-1 and C-7) received after the effective date without the required higher level approval will be returned to the originating department.
Further details on the policy change, updates to the Travel Procedures Manual, and updates to Travel & Entertainment forms will be made available by early April.
—Stephen D. Golding, Vice President for Finance and Treasurer
—Marie Witt, Vice President for Business Services
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