Creating a Framework for Reviewing Gifts, Meals, Travel and Entertainment Expenses

Companies spend a lot of time and resources reviewing potential payments for gifts, meals, travel and entertainment.  There are ways to make this process easier and more efficient. 

There are three basic requirements for making the review process more efficient.

1.  Prospective standards – Companies need to adopt and enforce a prospective policy which carves out standards for the review and approval of such expenditures.  The policy has to be clear on the standards and the procedures to be followed. 

2.  Documentation – Companies have to document the process, maintain records, and audit the process.  Without documentation, the policy is doomed to fail, and provides no protection when government prosecutors conduct an investigation.

3.  Advice of Counsel – Outside counsel should be used to review and approve any close calls.  The run-of-the-mill situations can be handled by the policy.  In close cases, outside counsel should review the matter, provide a short memo analyzing and approving the expenditure.  The memo should be added to the file and available to auditors and the government if needed.