Excessive or Luxury Expenditures
The Board of Directors (Board) of Afena Federal Credit Union (Credit Union) prohibits expenditures that are not reasonable in nature. Expenditures of the Credit Union should be customary, prudent, consistent with applicable laws and regulations, and reasonably related to the Credit Union’s business objectives and needs. This policy identifies expenditures that are excessive or luxury expenditures, creates processes that are reasonably designed to eliminate such expenditures, and establishes accountability for compliance. Routine operating expenses, capital expenditures, and other reasonable expenses are not prohibited by this policy.
The Credit Union has authority to provide compensation and benefits that are reasonable. This policy establishes a prohibition on expenditures that are excessive or luxury expenditures as required by the Department of the Treasury's Emergency Capital Investment Program regulations (31 CFR part 35), and as may be required by other statutes and regulations.
This policy is the responsibility of the Credit Union's Board. The Board has approved this policy and will review compliance with this policy no less frequently than annually, and summary data on excessive or luxury expenditures will be reported to the board as part of the compliance review.
This policy applies to all employees, officers, and directors of the Credit Union regarding any expenditure of the Credit Union. In making any expenditure on behalf of the Credit Union, employees, officers, and directors should consider whether the expenditure is an excessive or luxury expenditure that is prohibited under this policy. Expenses included in the Board approved annual budget, including but not limited to off‐site planning, Board meetings and member meetings, are not considered to be excessive or luxury expenditures and are excluded from this policy.
Excessive or Luxury Expenditures
“Excessive or luxury expenditures” means excessive expenditures on any of the following to the extent not reasonable or appropriate expenditures for member/business development, staff development, reasonable performance incentives, or other similar reasonable measures conducted in the normal course of the Credit Union’s business operations:
Entertainment and Events
Entertainment and/or Events includes fees, dues, ticket costs related to social, athletic, artistic, and dining clubs, activities, celebrations or other events, and similar expenditures. Expenditures for charitable contributions and charitable events are not prohibited under this policy. Non-budgeted entertainment or events expenditures in an amount greater than $500 per instance, or $5,000 on an annual aggregate basis per individual, requires prior written approval from the President/CEO or the Board of Directors
Office and facilities Renovations
Renovations of facilities and office spaces are permitted only for approved projects that are part of the Credit Union’s Board approved strategic plan or annual financial budget. An exception to this can be allowed if management must deal with an emergency situation, such as an act of nature, and the expenditure is necessary to make the facility operational for use. At no time should renovations be done that would have the appearance of being extraordinary or excessive from a management or board perspective.
Aviation or Other Transportation Services
Transportation for CU personnel to outlying locations, including branch locations, conferences, business development purposes and merger and acquisition research, should be conducted in the most cost appropriate way for the Credit Union. Mileage reimbursable according to current Internal Revenue Service mileage rates is exempt from this policy. Modes of transportation to be used may consist of vehicle (personal or rental), commercial air or rail service. Private air services are not allowed. Transportation services in an amount less than $1,500 per instance, and $10,000 on an annual aggregate basis per individual, are exempt from this policy. The President/CEO may establish or delegate to an appropriate executive officer the authority to establish processes for reimbursement of reasonable travel expenditures, which processes must be reviewed by executive management no less frequently than annually.
Tax Gross Ups
This category includes any reimbursement of taxes owed with respect to any compensation which is strictly prohibited.
Other Similar items, Activities or Events
Other similar items, activities or events for which the Credit Union may incur expenses, or reimburse an employee for incurring expenses, which are not specifically addressed elsewhere in this policy, shall be for legitimate business purposes and reasonable in nature and amount. These activities or events shall be approved under the Credit Union’s policies and procedures. Other items and activities are exempt from this policy in an amount less than $250 per instance, and together with all expenditures permitted under this policy, may not exceed $15,000 on an annual aggregate basis per individual.
For the avoidance of doubt, reasonable capital investments in technology, equipment, and similar items that expand the long‐term capability of the Credit Union to provide products and services to its members and community are not excessive or luxury expenditures.
The President/CEO and/or the Board of Directors may delegate to an appropriate executive officer the authority to establish processes for the evaluation and approval of expenditures in the preceding categories that are not luxury or excessive expenditures and that are not otherwise exempt from this policy. These processes will be reviewed by executive management no less frequently than annually, as well as any additional threshold expenditure amounts per item, activity, or event, or a threshold expenditure amount per employee receiving the item or participating in the activity or event under this policy. Such approvals must be reported to the Board of Directors (which may be in an appropriate summary form) no less frequently than annually.
Exceptions or Violations
Any exception or violation of this policy must be promptly reported to the Credit Union’s (i) President/CEO, (ii) officer with primary responsibility for the Credit Union’s compliance function, or (iii) officer designated with primary responsibility for overseeing the administration, monitoring, and compliance with this policy. Exceptions and violations must be reported to the Board of Directors no less frequently than annually, or more frequently as the nature and severity of violation may warrant. All employees, officers, and directors of the Credit Union must adhere to this policy and will be held accountable for compliance. Any employee or officer who violates this policy may be subject to disciplinary action up to and including termination of employment. Any employee or officer that is aware of any circumstance that may indicate a violation of this policy is required to report such circumstance to their supervisor or the Credit Union’s principal compliance officer or compliance group. The Credit Union prohibits retaliation against any employee or officer for making a good faith report of actual or suspected violations of the Credit union’s code of conduct, laws, regulations, or other Credit Union policies, including this policy. A finding of retaliation against any such employee or officer may result in disciplinary action up to and including termination. Failure to promptly report known violations by others may also be deemed a violation of the Credit Union’s code of conduct. Employees and officers may ask questions, raise concerns, or report instances of non-compliance with this policy and/or any of the existing underlying relevant policies by contacting the Credit Union’s Compliance Officer, Vice President of Human Resources, volunteers appointed to the supervisory committee, or the Chair of the Board of Directors.
Certification of Compliance
On an annual basis, the ECIP recipient will deliver to the Department of the Treasury a certification, executed by two senior executive officers (one of which must be either the President/CEO or Chief Financial Officer) certifying that (i) the Credit Union is in compliance with this policy and (ii) the approval of any expenditure requiring the prior approval of any senior executive officer, any executive officer of a substantially similar level of responsibility, or the Board of Directors (or a committee of such Board), was properly obtained with respect to each such expenditure.