Cash advances are funds paid directly to an individual prior to College approved travel. They are recorded as a loan to that individual until documentation substantiating their use is returned to Accounts Payable.
To obtain a Cash Advance:
Submit a completed Cash Advance Form to Accounting at least two weeks prior to the planned travel/event.
If the advance includes a "per diem" for participants of a group trip, calculations for the total should be included on the form, and the per diem amount should not exceed the federal per diem rate.
The submitted form must include the signed approval of both the budget manager and senior leader responsible for the account where the expenses will be charged.
Advances are issued by check, must be picked up in Accounting, and will include a dated reconciliation report with specific instructions for completion.
To reconcile a Cash Advance:
Carefully follow the instructions on the reconciliation report received with the advance funds.
Reconciliation is governed by IRS "safe harbor" and "accountable plan" regulations. As such, the advance cannot be distributed more than 30 days prior to the travel/event. Furthermore, all documentation (receipts for expenses, documentation of business purpose, names and business relationship of persons entertained (if applicable), any supplementary forms), and cash in excess of expenses must be returned to Accounting within 30 days after the conclusion of the travel/event.
In circumstances where the reconciliation report is not returned within 60 days, the advance will be treated as taxable income to the employee, OR the "borrowed" funds may be withheld from the employee’s payroll disbursements.
In compliance with fiscal year-end requirements, advances received prior to June 30 must be reconciled by July 15.
IRS regulations require all travel expenses to adhere to an "Accountable Plan." In circumstances in which they do not, reimbursed amounts must be treated as taxable income to the employee. An "Accountable Plan" requires that expenses have a legitimate business purpose and be substantiated with sufficient records. Any amount in excess of the cash advance must be returned.
IRS regulations indicate the following safe harbor method for the substantiation or return of advanced amounts:
-
An advance will be made no more than 30 days before expenses are incurred.
-
The employee must substantiate expenses no more than 60 days after the expense is incurred.
-
After 120 days, unsubstantiated amounts are to be treated as a taxable income to the individual.
Please read Kenyon's Travel and Entertainment Expense Policy for further information. As discussed in the remittance procedures, the College requires all expenses to be properly documented in order to comply with IRS regulations.