HQOI FM 07-1 1 MAY 20071
CIVIL AIR PATROLOPERATING INSTRUCTION FM 07-2
NATIONAL HEADQUARTERS
MAXWELL AFB AL 36112-633230 MAY 2007
Financial Management
BUSINESS MEALS AND ENTERTAINMENT
OPR: FM APPROVED BY: EX
DISTRIBUTION: INTRANET/OUTSIDE OFFICES
Civil Air Patrol’s Business Meals and Entertainment Policy provides guidance relating to the corporate expenses for official business meals and entertainment expenditures in accordance with applicable Internal Revenue Service regulations (Pub 463) and sound business practices. Civil Air Patrol will allow expenditures for entertainment if it is for the business purpose of expanding or advancing a business relationship between CAP and its donors. The expenditure must be within the bounds of good taste, must be reasonable, and must not include lavish or excessive entertainment.
1.Guidelines
2.Allowability
3.Business Meals.
4.Selected Items Governed Under This Policy.
5.Documentation Requirement.
1.Guidelines. Civil Air Patrol’s Business Meals and Entertainment Policy has been formulated to:
a.Provide guidance on the utilization of funds for business and entertainment expense that support Civil Air Patrol’s programs.
b.Provide specific requirements for reporting expenditures for business meals and entertainment.
2.Allowability. Expenses for business meals and entertainment must be ordinary and necessary per the IRS definition and must meet the following criteria:
a.Directly-related test:
- Entertainment took place in a business setting and the purpose is to promote CAP
- Convention
- Hospitality room
- The main purpose of the combined business and entertainment was the active conduct of business
- You did engage in Civil Air Patrol business during the entertainment period
- You had more than a general expectation of Civil Air Patrol getting income or some other specific business benefit at some future time
Per the IRS, business is not considered to be the main purpose of an event when business and entertainment are combined on hunting and fishing trips, or on yachts or other pleasure boats.
If Civil Air Patrol business is only incidental to the entertainment, the expenses do not meet the “directly related” test. For example, cocktail parties and sporting events are considered entertainment that is not directly related entertainment expenses.
b.Associated test:
- Entertainment must be directly associated with the conduct of Civil Air Patrol business and there must be a clear business purpose
- Entertainment must occur before or after a “substantial business discussion”. There must be an active discussion, negotiation, or other transaction pertaining to the business of Civil Air Patrol.
3.Business Meals. Business meals are allowable expenditures of the corporation. A business meal is defined as a meal shared by employees, volunteers, or donors during which business discussions take place.
a.Employees must obtain approval from the Executive Director prior to obligating the corporation for business meals or entertainment expense.
b.Business meals must not be lavish
c.Alcoholic beverages must be kept to a minimum
4.Selected items governed under this policy:
a. Protocol expenses—Beverages and snacks for visitors may be provided without prior approval with EXA oversight.
b.Employee appreciation events—Expenditures are allowable with approval of the Executive Director.
c.Holidays—Certain holiday expenditures may be authorized with approval of the Executive Director.
d.Alcohol—Expenditure is not authorized for any of the corporate events listed in a through c above.