We all remember the childhood game of Twenty Questions – the object of the game was to guess the person, place or object which the other person had in mind.  In keeping with that spirit, I thought I would put together Twenty Questions with a similar objective – to try and capture the state of mind of the company employee who is seeking approval for a gift, meal, entertainment and/or travel expense.

The key issues to resolve when prospectively reviewing such an expense are whether the expense complies with the company’s policy, and what is the purpose of the gift.  The checklist of Twenty Questions is designed to elicit facts and circumstances which should be captured in documents surrounding the transaction to ensure transparency and the absence of “corrupt intent.”

A gifts, meals, entertainment and travel policy does not need to be complicated – formulas are not needed, a prospective plan which is reasonably designed, and creates levels of review based on amount and circumstances of the expenses, is all that is needed.  Simplicity is the key. 

Here is the checklist. 

Gifts, Meals, Entertainment and Travel Checklist

This checklist assumes that the company’s gifts, meals, entertainment and travel expenses are prospectively reviewed rather than being reviewed for reimbursement purposes.  The Justice Department and the SEC have stated that a company should have a policy which prospectively reviews such expenses.

 1.  Who are the proposed recipients?  Are they “foreign officials” (which is defined to include state-owned businesses “controlled” by foreign government entity) or private company representatives?

 2.  Are there any legal or policy restrictions on the recipients’ ability to receive the gift, meal, entertainment or travel benefit?

  3.  What is the purpose of the company providing a gift, meal, entertainment or travel expense?

 4.  Where will the expense be incurred (e.g. restaurant, company facility, sporting event)?

 5.  How much is the expense (include any tangible benefit to the recipient)? 

 6.  How will each expense be paid? (e.g. directly by the company or recipient reimbursement)

 7.   For each expense, describe the specific circumstances and type of gift, meal, entertainment, accommodations or travel arrangements to be provided.

 8.  Are there any feasible ways to reduce any of the expenses without disrupting the purpose of the expense and interaction between the company and the recipient?

 9.  Will any person affiliated with the recipient (e.g. spouse, family member or other guest) receive a gift, meal, or attend the event or travel with the recipient?  If so, describe the specific benefit and explain the circumstances.

10.  What role does the recipient(s) have in deciding issues which relate to the company’s business, including any issue which may benefit the company (e.g. foreign customs official, foreign tax representative)?

11.  What is the nature of the business relationship between the company and the recipient’s organization?

 12.  Does the company have any pending proposals before the recipient or the recipient’s organization?

 13.  Are there any ongoing interactions between the company and the recipient’s organization?

 14.  What is the threshold amount for an expense above which a senior official at the company will be required to approve?  Is there a second threshold amount for a more senior official to approve?

15.  How will the expense be recorded in the company’s financial records?

16.  What documentation is prepared for the expense and the circumstances surrounding the proposed expense?

17.  What specific approvals are required on such documentation before the expense can be incurred?

18.  If the expense relates to attendance and participation at an industry event or meeting, describe the circumstances surrounding the event. 

19.  Who is sponsoring the industry event?

20.  What is the purpose of the event?