Policy handbook
Copy, edit and adopt. Adjust the limits to your own spend history before rollout.
1.0Purpose and scope
This policy covers travel, client meals, entertainment, gifts and other business expenses for all employees, including registered representatives and investment adviser representatives. It serves two purposes: reimbursing employees under IRS accountable plan rules and creating the records the firm needs to show compliance with FINRA and other regulators' gift and non-cash compensation rules. Where the compliance manual is stricter, it controls.
2.0Roles and approvals
Managers approve their direct reports' expenses. Compliance pre-clears every gift, every entertainment ticket and any client meal above $600 in total, and reviews the gift and entertainment register monthly. Accounts Payable checks receipts and coding, and the controller approves reports above $5,000. Managing directors approve international business class. Expenses of the CEO and other executive officers are approved by the CFO and reviewed by the audit committee chair.
3.0Booking and lodging
Flights, hotels and rail must be booked through the firm's travel tool. The firm will reimburse a standard room up to the nightly caps, including taxes, with an itemized folio attached. When attending a client-hosted or industry conference, employees should use the event hotel block. If a client or vendor offers to pay for the employee's travel or lodging, Compliance must approve it before acceptance.
4.0Employee meals
While traveling, employees may spend up to the daily meal allowance on their own meals. Meals in the home city are personal unless a client or prospect is present. Team dinners for deal closings or year-end events need department head approval in advance. Meals ordered to the office when working past 8 pm are reimbursable up to $32, once per evening.
5.0Client meals and business entertainment
Client meals and entertainment are permitted only when a firm employee attends and the occasion has a genuine business purpose. Employees must record the client's name, firm and relationship, the employee host and the per-person cost in the gift and entertainment register within five business days. Entertainment is nondeductible under the Tax Cuts and Jobs Act of 2017, and food bought separately at an event must be itemized.
6.0Gifts to and from clients
Every gift to a client or a counterparty's employee must be pre-cleared by Compliance and stay within the firm's per-recipient annual cap under applicable gift and non-cash compensation rules. The tax deduction for business gifts is limited to $25 per recipient per year. Gifts received from vendors or clients must also be reported to Compliance. Cash and gift cards may never be given or accepted.
7.0Alcohol
Alcohol is reimbursable with client meals and approved team events, up to two drinks per person, and any single bottle over $95 needs approval from the department head. Alcohol must be itemized separately on the receipt. Alcohol on solo travel, from hotel minibars or at events where no client attended is personal. Employees are expected to use judgment and represent the firm well.
8.0Ground transport
Employees should use standard car service, ride-share or transit. Car service home after 9 pm from the office is reimbursable, as is car service to and from early-morning client meetings before transit runs. Personal vehicle use is reimbursed at the IRS standard mileage rate. Black car upgrades, waiting time caused by personal errands and parking fines are personal.
9.0Personal and mixed expenses
Personal expenses, including companion travel, upgrades, spa services and personal charges on a hotel folio, are not reimbursable and must be removed before submission. When a business trip includes personal days, the firm pays only what a business-only trip would have cost. Club memberships, personal investment subscriptions and professional exam retakes after a second attempt are not reimbursable.
10.0Receipts and substantiation
Expenses must be submitted within 60 days after they are paid or incurred, with amount, date, place and business purpose for every line. Itemized receipts are required for all lodging, any expense of $75 or more, and any client meal, gift or entertainment of $25 or more. Client spend that is not logged in the gift and entertainment register will be returned until it is.
11.0Corporate card and returning excess
Corporate cards are for business expenses only. Personal charges must be flagged within 10 days and repaid. Travel advances are issued no more than 30 days before travel, and any unspent amount must be returned within 120 days after the expense was paid or incurred. Amounts not substantiated or returned on time are reported as taxable wages through payroll.
12.0Audit, pushback and consequences
Accounts Payable reviews every report, and every flag raised by audit software is reviewed by a person, including client spend missing from the register and gifts that would push a recipient over the annual cap. The software may draft clarification requests, but finance and Compliance approve each message before it is sent. Violations of gift and entertainment rules are escalated to Compliance and may lead to discipline.
Recommended limits
| Category | Limit | Note |
|---|---|---|
| Domestic hotel (per night) | $329 in New York, Boston, San Francisco and Chicago; $236 elsewhere | Client-hosted conference hotels follow the event rate. |
| International hotel (per night) | $362 in London, Hong Kong, Zurich and Singapore; $248 elsewhere | Booked through the travel tool for duty of care tracking. |
| Daily meals (traveling) | $92 per full travel day | Covers the employee only; client meals follow the client meal row. |
| Client meal (per attendee) | $145 including tax and tip; logged as business entertainment | A firm employee must attend. Logged in the gift and entertainment register. |
| Domestic airfare | Economy; first class never reimbursed | Change fees caused by client meetings are reimbursable with notes. |
| International airfare | Business class on flights over 7 hours with managing director approval | Economy on all other international flights. |
| Ground transport | Standard car service or ride-share; $95 per airport transfer | Late-night car service home after 9 pm is reimbursable from the office. |
| Alcohol | Two drinks per person with clients; bottles over $95 need approval | Never on solo travel. |
| Business gifts | Per-recipient annual cap set by Compliance; tax deduction limited to $25 (IRC § 274(b)) | Pre-cleared and logged before the gift is given. |
| Receipt required at | $25 for all client spend; $75 (IRS threshold) otherwise | Compliance reviews client spend receipts, not just finance. |
| Pre-approval required at | Any entertainment ticket, any gift, or any client meal over $600 total | Pre-clearance is through the compliance portal. |
IRS Accountable Plan clauses
Keep these in the handbook so reimbursements stay excluded from wages under IRC § 62(c) and Treas. Reg. § 1.62-2.
- A1The firm reimburses only expenses with a business connection to services performed for the firm, and each client-related expense must identify the client relationship, as Treas. Reg. § 1.62-2 and § 1.274-5 require.
- A2Employees must substantiate amount, time, place and business purpose within 60 days after an expense is paid or incurred, satisfying the fixed-date safe harbor in Treas. Reg. § 1.62-2(g)(2).
- A3For client meals and gifts, the record must also show the names and business relationship of the people involved, which Treas. Reg. § 1.274-5 requires in addition to the receipt.
- A4Itemized receipts are required for every lodging expense and any other expenditure of $75 or more, as Treas. Reg. § 1.274-5(c)(2)(iii) provides.
- A5Advances and other amounts exceeding substantiated expenses must be returned within 120 days after the expense is paid or incurred, or they are included in W-2 wages subject to withholding and FICA.
Common pitfalls in financial services
- Keeping the expense system and the gift and entertainment register separate. When client meals are paid but never logged, the firm cannot show regulators a complete record.
- Treating tickets as entertainment when no employee attends. A ticket handed to a client for an event the host skips is generally a gift, and it counts toward the per-recipient gift cap.
- Approving year-end client gifts in bulk without checking each recipient's running total. One recipient may already be near the cap from an earlier gift.
- Letting senior bankers approve each other's expenses. Executive expenses need approval from someone outside the reporting line, and audit committees look for that control.
- Coding stadium suites as client meals. Unless food is separately stated, the whole invoice is entertainment and 0% deductible.
Questions
Generally, when a firm employee attends with the client, it is business entertainment and goes in the register as such. When the employee gives the tickets away and does not attend, regulators typically treat the tickets as a gift subject to the per-recipient cap. The compliance manual sets the firm's exact treatment, so employees should pre-clear tickets before offering them.
The $75 threshold only answers the tax question. Compliance needs receipts for client meals, gifts and entertainment at lower amounts so the gift and entertainment register can be tested against actual spend. A $41.80 coffee meeting with a client looks small, but regulators reviewing the register expect each entry to tie back to a record the firm can produce.
Yes, if the dinner is reasonable and the client attends, but it must be reported to Compliance within five business days. If a client offers to pay for travel, lodging or an event the employee would attend alone, Compliance must approve it before acceptance. Gifts received are tracked the same way as gifts given, against the firm's per-recipient limit.
Expenses of the CEO and executive officers are approved by the CFO, and the CFO's own expenses are approved by the CEO, with a quarterly summary reviewed by the audit committee chair. Executive expenses follow the same caps and receipt rules as everyone else. Independent review matters because executive perquisites may need to be disclosed and are a common focus of examinations.