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Office of Business and Finance

Reconciliation & Justification of Business Expenses

There are long-standing requirements included in many University policies to provide justifications of the business purpose of expenses. Submitting expenses without these items leads to increased processing time and follow-up as well as the increased potential for fraud, waste and abuse. When requesting payment for business expenses or reconciling expenses, regardless of the system, payment method, or platform, do your best to include justifications that provide enough information for an expense to make sense and be justifiable to an outside observer with no additional context.

 

When is a business justification required?

  • Justifications are required for any purchase made using University or SOG resources, regardless of procurement method. This includes:
    • Expenses on any SOG credit card: Pcard, T&E card, Ramp Card, Civic Cards
    • Expenses submitted for personal reimbursement
    • Travel expenses
    • Invoices paid to vendors
    • Supplies ordered through BuyCarolina

What should I include in my business justification?

  • Describe the purchase: What was it? Why was it needed? For whom was the purchase made?
  • Benefit: How did the purchase benefit the University?
  • Funding source: Is there dedicated funding for the expense (i.e. for a course, agreement, gift, or grant)? Or is it a general business expense?
  • Avoid jargon and acronyms: Would an outside observer understand the terminology and acronyms used?
  • Prudent person test: Is this expense ordinary and necessary for the business purpose? Does this expense represent a departure from our normal, established practices? Would a prudent person be able to understand and justify the expense?

 

What are some examples of good (and not so good) business justifications?

(note: these are fictional examples)

  • Not so good: “This is the same trip I take every year for NCACUBO”
  • Good: “I traveled to Smalltown, NC to attend the annual conference for the NC Association of College and University Business Officers. This conference focused on data and reporting for university business officers and is part of my annual professional development plan. I drove in a state car and stayed at the hotel reserved for conference attendees. Funding is from general SOG funds for professional development.”

 

  • Not so good: “Catering for CDA”
  • Good: “Payment to catering company for lunch served to attendees of the SOG’s Community Development Academy Session 12 on April 25, 2024. Agenda and attendee list are attached.”

 

  • Not so good: “Note taking software for DHHS project”
  • Good: “Scribblizer is a software used to create summarized meeting notes. This software was purchased to facilitate a series of focus groups with support from a grant from the NC Department of Health and Human Services. The goal of the focus groups is to understand needs of regional offices focused on employment and independence for people with disabilities. Focus groups will be held between January and March 2024.”

 

What other documentation is required?

  • An itemized receipt/invoice:
    • This documentation must show the date of purchase, the name of the merchant, a complete list of items purchased, total price and method of payment.
    • For business meals, both the credit card receipt and the itemized receipt are required.
  • Additional documentation may be needed depending on the purchase; for example, an attendee list and agenda for programs or meetings. Please review the Business Office Microsite or reach out to a member of the business office team with any questions.

 

Why do we have to do this?

  • Proper reconciliation and justification of business expenses is required by University policy and state law.
  • Recent State audits have identified serious problems at other UNC institutions (see: FSU financial, travel cards misused, thousands spent on gifts, trips and Amazon, state audit shows), inspiring increased oversight at UNC-CH
  • The University has recently engaged with a third-party audit provider to heighten the level of scrutiny on P-Card reconciliations and plans to add additional scrutiny for travel expenses. In addition, SOG Services and the SOG Foundation are audited annually by an independent auditing firm. Paying careful attention to providing strong business justifications and related documentation will help you avoid having to respond to questions related to these audits.

 

Relevant University Policies:

These requirements can be found in numerous University policies, including: