As many of you may be aware, the Sarbanes-Oxley Act of 2002 was enacted in response to the rash of corporate accounting scandals, and is applicable to public corporations. Our auditors, PricewaterhouseCoopers, recommended that the College adopt best practices as the Sarbanes-Oxley Act might apply to higher education. Our Budget & Audit Committee formed a subcommittee to further explore this issue, and as a result, has recommended that a separate Audit Committee be established as of July 1, 2004.

As part of establishing best practices, we are working on understanding and documenting our internal controls. We have also tried to tighten the controls over reimbursements to college faculty and staff, and confirm that the College's policies are applied consistently throughout the campus. Through this process, several changes have been made to the reimbursement policy. A copy of the full policy may be accessed on the College's website at http://hr.claremontmckenna.edu/policies/reimbursement.asp, or may be requested from my office.

I would like to clarify certain aspects of the policy that seem to cause the greatest confusion:

Gifts: The College will not reimburse employees for any gifts purchased for students or other employees. Any gifts charged on College credit cards will require the credit card holder to reimburse the College. The only gifts authorized are for retirements and must be handled by the Department of Human Resources. Any gifts of personal appreciation for specific employees or students should be handled at a personal level. It is difficult to monitor gift-giving fairly and consistently across the campus, and there are tax conisidertions with gifts to employees. It is much cleaner to establish a policy of "no gifts".

Meals: In light of budget cuts in the past couple of years, and looking for ways to streamline expenses, we found that the College was spending a substantial amount of money on meals, both on and off campus. We have set guidelines for reasonable expenses for meals while traveling, which are detailed in the reimbursement policy.

In addition, employees going off-campus for lunch or other meals with only other employees will no longer be allowed reimbursement from College funds. If a business meeting is required between two or more employees, this should be done on campus during business hours, or held in Collins to take advantage of meals already provided to faculty and exempt staff. When meals off-campus are necessary for business purposes, IRS guidelines require documentation of the business purpose and a detailed list of attendees, as well as all original receipts itemizing expenses. This includes department lunches to discuss department business. If the meeting can not be held at another time, then all appropriate documentation will be required for reimbursement.

Social events: Departments and Institutes have historically held various social events during the year, such as a welcoming event for new faculty. In order to be considered eligible for reimbursement, the business purpose of the event must be provided as well as a list of invitees and attendees. For example, dinner for a spouse may not be eligible for reimbursement unless documentation is provided to indicate the reason for the spouse attending the event. This also includes recruiting dinners - documentation must be provided to provide the business reason for a spouse to attend such a dinner. If the event is social in nature, and is intended to include spouses, the documentation should indicate that all spouses were invited, not a select few.

Our job in the Treasurer's Office is to make sure the policies are implemented fairly and consistently across the campus, and that reimbursements follow IRS guidelines. We also make sure that College funds are spent as intended by donors or within the budget guidelines as part of our fiduciary duties. If requests for reimbursement are returned to the requesting department, it is typically due to a lack of appropriate documentation, not a question of integrity. As we continue to streamline the reimbursemetn process and communicate the expectations throughout the College community, there should be fewer questions about expenses eligible for reimbursement, and better documentation of expenses submitted for reimbursement.

If there is ever any question about an expense, please feel free to contact Barbara Maxwell, Assistant Treasurer and Budget Director, beforehand for guidance.