Internal Control Practices | Entertainment

Entertainment usually involves a guest-host relationship in which a UC Davis host invites an official guest to attend an event.

You may have meetings that don't fall into this category but still incur allowable entertainment expenses.
If you spend funds on university-sponsored events or host official guests, learn best practices for entertainment-related spending.

Separation of duties
A key step your department can take when handling entertainment expenses is to have different people involved in the process. Entertainment expenses must serve a business purpose, with no personal benefit to the host or other university employee.

Best practice is to have different people:

> Host the event
> Prepare cost reimbursements
> Approve reimbursable costs
> Review and reconcile financial records

Potential consequences if duties are not separated:

> Erroneous or fraudulent charges approved for payment.
> Unauthorized or fraudulent reimbursements processed.
> Unauthorized or excessive costs incurred.
> Personal or non-business related costs are reimbursed.
Accountability, authorization, and approval
You maintain accountability when you properly authorize, review, and approve expenses that make the best use of public funds and comply with University entertainment policy.

Best practices:

> Ensure that the proper approval authority is in place.
> Obtain pre-approval for entertainment event.
> Evaluate expenses to ensure that anticipated benefits outweigh costs.
> Verify that expenses are appropriate to the fund source charged.
> Justify why exceptional expenses were incurred and necessary.
> Obtain vice chancellor approval for all exceptional expenditures.

Potential consequences if accountability does not exist:

> Damaged public image if costs are inappropriate.
> Unauthorized, unnecessary, or fraudulent payments.
> Loss of funding.
> Improper charges to incorrect account/ funds resulting in a misappropriation of funds.
> Excessive costs incurred.
Security of assets
Once you've purchased and received the goods to be used for an approved event, secure them in a place where a limited number of people have access.

Best practices:
> Secure goods in a restricted area.
> Restrict access to the appropriate staff.
> Keep inventory records of goods to assure anticipated consumption levels will be met.

Potential consequences if your assets have not been secured:

> Stolen or lost goods
> Inadequate quantity of goods and supplies to support the event
> Personal use of university assets
> Increased costs due to replacement of goods
Review and reconciliation
Your reconciliation activities ensure that your entertainment costs are accurate and appropriate. Perform monthly ledger reviews to confirm that you're paying for approved charges.

Best practices:
> Review costs to ensure that they are properly classified and recorded.
> Review fund restrictions to assure that expenses are allowable and appropriate.
> Periodically review and update signature authorizations.

Potential consequences if review and reconciliation is not performed:

> Improper charges made to your department budgets.
> Disallowances resulting from costs charged to incorrect accounts/funds.
> Payments made for items or services not provided.
> Misstated financial records.

Resources

Travel and Entertainment

Policies

Questions?

For questions on entertainment, contact Travel & Entertainment.
For questions on internal control practices, contact Controls & Accountability.