Rice University General Policy No. 811

BUSINESS MEETING AND ENTERTAINMENT EXPENSE POLICY

Overview. Rice University will pay for necessary and reasonable business meeting and entertainment expenses. The accounting and reporting of such expenses must comply with applicable Internal Revenue Service (IRS) rules and with government costing principles that govern both the calculation of the facilities and administrative (F&A) cost rate and the allowability of direct charges to government-funded sponsored agreements. Within those parameters, this policy seeks to define necessary compliance and reporting requirements.

Government costing principles prohibit alcoholic beverages and entertainment expenses from being charged to the government, directly or in the F&A rates. This policy permits these charges to be tracked separately or combined, at the discretion of the department, as long as they are not charged directly to federal awards and are coded to an appropriate general ledger code. Nonetheless, expenditures for alcoholic beverages should be reasonable and appropriate for the circumstances of the event and for an institution of higher education.

IRS rules require business expenses to be documented in a timely manner. If business expenses paid by Rice are not properly documented or are not documented within a reasonable timeframe, Rice may be required to report these expenses as taxable income. 

Detailed receipts for amounts greater than the de minimis level set by the IRS must be submitted as proof of expenses. Except in unusual circumstances, original receipts should be submitted. Deans or vice presidents may set limits lower than the IRS’ de minimis limit in their areas, if desired.

I. Business Meeting Expenses

Business meetings are a part of Rice University’s research and business activities. Each department should make sure that expenditures for this purpose are reasonable and appropriate for an educational institution. Business meetings include situations in which business cannot be transacted other than at a mealtime or in which planned meetings extend through the normal mealtime.

Business meeting expenses may include charges for meals as well as other direct costs of the meeting (e.g., room setup charges, wait staff, etc.) at which Rice employees and their guests meet to talk about research or other institutional business. Business meeting costs do not include entertainment or social activities or any costs directly linked to entertainment (such as tickets to shows or sporting events, lodging, transportation, or food or rental costs related to entertainment).

Business meeting expenses must be reported online or on a Business Meeting/Entertainment expense form that clearly states the business purpose and are subject to the following guidelines:

• Cohen House or other on-campus services such as Rice Catering should normally be used for luncheon meetings;
• If a business meeting involves lunch or dinner, the cost per person should be reasonable for food, beverages, taxes, gratuities and other related costs (e.g., room setup charges, wait staff, etc.). Please refer to the Business Meeting and Entertainment Expenses Procedures for current guidelines;
• If any alcoholic beverages are served at a business meeting, the cost (including tax and tip) must be separately identified and coded to a general ledger account code for Alcoholic Beverages or Entertainment/Alcoholic Beverages. This separate identification is required for all funds under government costing principles that govern the calculation of the facilities and administrative (F&A) cost rate, since alcoholic beverages may not be charged to the government either directly or through the F&A rate. Departments may choose whether to combine entertainment and alcoholic beverages in one general ledger code or to track them separately using the general ledger code for alcoholic beverages.  In all cases, charges for alcoholic beverages should be reasonable and appropriate for the circumstances of the meeting and for an institution of higher education. The cost of alcoholic beverages must never be charged to a sponsored agreement funded directly or indirectly by government funds; and
• The costs of a business meeting may be charged to a sponsored agreement (grant or contract) only if the awarding agency allows such costs. If the meeting is charged to a grant or contract, a detailed agenda/outline and an explanation of the purpose of the meeting and the relationship to the award being charged must be provided with the Business Meeting/Entertainment expense form. For government awards, the cost must be an integral and necessary part of the conference or other formal, organized meeting (e.g., working meals where business is transacted). Reimbursement from government sources for either meals or coffee breaks where the participants are all Rice employees is not allowed. Costs of receptions, meals related to hosting a speaker or guest or other social activities must not be charged to government awards.

II. Entertainment and Similar Expenses

There are occasions when the entertainment of special visitors, speakers, prospective faculty, staff or students is appropriate and in the University’s interest. Each department should make sure that expenditures for this purpose are reasonable and appropriate for an educational institution. Entertainment and similar expenses may not be charged to research awards. Entertainment includes any activity generally considered to provide amusement or recreation.

Entertainment expenses must be reported online or on a Business Meeting/Entertainment expense form that clearly states how the event benefits Rice and are subject to the following guidelines:

• Cohen House or other on-campus services such as Rice Catering should normally be used for luncheon events;
• Costs per person for a luncheon or an evening’s entertainment should be reasonable for food, beverages, taxes, gratuities and other related costs (e.g., room setup charges, wait staff, etc.). Please refer to the Business Meeting and Entertainment Expenses Procedures for current guidelines;
• All costs, including any alcoholic beverages served, may be charged to the Entertainment/Alcoholic Beverages general ledger code.  If a department desires to track the costs separately, the cost of alcoholic beverages may be calculated and coded to the Alcoholic Beverages general ledger code. In all cases, charges for alcoholic beverages should be reasonable and appropriate for the circumstances of the meeting and for an institution of higher education. The cost of alcoholic beverages must never be charged to a sponsored agreement funded directly or indirectly by government funds;
• The number of University employees accompanying guests of the University should be appropriate to the purpose of such entertainment;
• Normally, spouses or partners of Rice employees share in an evening’s entertainment only when the spouses or partners of guests are also included;
• Costs of departmental gatherings, such as receptions for faculty and students, should be reasonable, based on the size of the department and the purpose of the event.; and
• NCAA rules apply to activities involving recruitment of student athletes.

III. Submission and Approval of Business Meeting and Entertainment Expenses

IRS rules require business meeting and entertainment expenses to be documented in a timely manner. Undocumented or untimely submission of business expenses may require Rice to report these expenses as taxable income. Thus, expenses should be submitted and approved no later than thirty (30) calendar days after the meeting or event.

Business meeting and entertainment expenses must be approved by:

• The Principal Investigator (PI) if research funds are being charged, AND
• The appropriate person as noted in the chart below. Note: The approver may never report to the individual for whom the expense is incurred, nor may the approver attend the event.

______________________   
David W. Leebron, President

Policy No. 811
April 18, 2007
Issued: August 8, 1973
Revised: January 22, 1974
Revised: May 20, 1975
Revised: October 17, 1977
Revised: January 29, 1980
Revised: July 15, 1999