Cash Disbursements, via the University of Maryland College Park Foundation, are requested by the specific account holder in various schools and departments at College Park. Please use the Disbursement Request Form in Appendix H.
Control Objectives: To ensure that cash is disbursed only upon proper authorization supported by the appropriate documentation, is for valid business purposes, and is properly recorded, all disbursements must:
• provide a direct benefit to a school, institute, agency, or program; • properly reported for tax purposes; • used in compliance with any donor restrictions
General Guidelines
Accountable Plan:
The Foundation has an “Accountable Plan”. The term “Accountable Plan” was developed by the IRS to set forth rules, which define legitimate expense reimbursements.
A qualified Accountable Plan requires all expenditures to
• Have a bona-fide business purpose
The IRS may view a disbursement as providing a personal benefit if there is any doubt concerning its business purpose. Even though in some cases the business purpose may be implied, it must be specifically documented to pass IRS scrutiny.
Paying for or reimbursing for lavish or extravagant expenses in unacceptable. These terms are used in IRC Sec 162 and are repeatedly used in IRS documentation, usually with a statement that these expenses are non-deductible. The Foundation will determine at its sole discretion either not to pay or reimburse or to reduce payment requests for expenses, which are unreasonable.
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• Be properly substantiated
The Foundation requires original receipts in the case where an employee is reimbursed for a portion of the expenses from University sources. In these instances, a copy of the receipt and the State reimbursement form will be accepted. Otherwise, the Foundation will not reimburse for expenses, which lack original receipts.
Credit card statements are generally insufficiently detailed to provide adequate supporting documentation. Original receipts for credit card purchases are obtainable from the vendor and should always be attached to the check request.
Reconstruction of records is allowable if originals lost through circumstances beyond the taxpayer’s control, such as fire, flood, etc. There may be some cases in which the Foundation will reimburse a person for bona fide business expenses when receipts have been lost, but the reimbursement will generally be included as taxable compensation.
• Be accounted for on a timely basis
The Foundation will not reimburse for expenditures more than six months old. However if a person receives a travel advance, IRS guidelines are more stringent. All travel advances must be accounted for within 60 days. (See travel reimbursement procedures below. Deduct the amount advanced from your requested reimbursement or remit a check made payable to the Foundation with a non-gift deposit form if your advance exceeds the expenses).
Under Reg. 1.62-2 (f) an “Accountable Plan” must require persons to return within a reasonable period of time the amounts reimbursed that exceeded substantiated business expenses (advances).
Reg. 1.62 (h) states that if a company has an “Accountable Plan” but the person does not return excess amounts within reasonable time, the amount, which is taxable, is reported as compensation to the person.
Procedures
Disbursement Requests
All requests for disbursements must be on a Disbursement Request Form – Appendix H. The form must be completed in its entirety.
• Detail the purpose for which the funds are to be used, (i.e., use for materials to be purchased, reason for meeting and with whom. See section on Accountable Plan for more detailed instruction for travel and other types of reimbursements.) • Original supporting documentation must be attached (i.e. detailed invoices or receipts for all expenses over $25, for university employees a copy of approved Out-of State Travel authorization).
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Balance due statements are not acceptable.
• Two signatures are required – the requester and the approver. The approver must be one of the two persons who are listed on the account agreement form as having signature authority. However, if the check is to be made payable to one of those persons, that person’s supervisor must sign the form. It is vital to understand that their signature serves as certification of the propriety of the requested expenditure to the best of their knowledge and belief
• A self-addressed return envelope must be enclosed if the check is to be returned to the originating office, or a request, “Please Mail Directly to Payee” noted on the form if the check is to be sent to the vendor. If the department chooses to distribute the checks directly to the vendor then for internal control, someone without access to the checks should reconcile the account.
If the form is incomplete of its missing pertinent supporting documentation, the missing information will be identified and the request returned to the sender.
Disbursement Request Forms received at the UMCPF’s Business Office by 1:30 P.M. Friday will usually be available the following Wednesday. Because procedure requires all requests be reviewed prior to check writing, request will be processed until the following week.
The foundation will not reimburse for:
• Personal expenses i.e. meals, room, travel for a spouse or family, or when not on bona-fide business; • Purchase and/or maintenance of equipment located at a home or other off-site location • Political contributions
• Questionable items – those not in compliance with policies and grant requirements established by USM, the granting agency, or the Foundation, or those that may give the perception of misuse of charitable funds) • First or business class airline tickets, except for overseas travel, otherwise must be pre-approved due to extenuating circumstances; • Loans to university employees or any other individual • Payments of fines, penalties or finance charges
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• Donations to other charitable organizations unless it is a de minimis amount given as an expression of condolence or sympathy
Travel Reimbursements
An itinerary with a brief description of the business activity for each day must be provided. If reimbursement request relates to attending a conference, a copy of the brochure with a note stating the traveler attended the event, is acceptable.
Itemization of the expenses:
• The hotel receipt must be a folio that itemizes the charges • Per Diem of actual costs (with receipts) may be used for meals • For domestic travel, you may use the UMCPF approved rate, currently $36.00 per day (breakfast $7.50, Lunch $9.50, Dinner $19.00) • For foreign travel: use the U.S. State Department rate can be used. Please see www.state.gov/www/ser
If you are billing for actual meal expenses, include a receipt for all meals that exceed the per diem rate. Amounts exceeding the per diem may be questioned.
