Excessive or Luxury Expenditure Policy
A participant in the Emergency Capital Investment Program (ECIP recipient, as defined at 31CFR35.21) is required to establish and maintain policies designed to eliminate excessive or luxury expenditures. The term “excessive or luxury expenditures” means excessive expenditures on any of the following to the extent such expenditures are not reasonable expenditures for staff development, reasonable performance incentives, or other similar reasonable measures conducted in the normal course of the ECIP recipient’s business operations: (1) entertainment or events; (2) office and facility renovations; (3) aviation or other transportation services; (4) tax gross-ups; and (5) other similar items, activities, or events for which the ECIP recipient may reasonably anticipate incurring expenses, or reimbursing an employee for incurring expenses.
Excessive or Luxury Expenditures Policy
The credit union will establish parameters and internal controls governing the expenditures of Suncoast Credit Union (Credit Union). 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 applies to all employees, officers, and directors of the Credit Union with regard to 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.
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 business development, staff development, reasonable performance incentives, or other similar reasonable measures conducted in the normal course of the Credit Union’s business operations:
(1) Entertainment or events. This category includes fees, dues, tickets 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. Entertainment or events expenditures in an amount less than $20,000 per instance, and $100,000 on an annual aggregate basis per individual, are exempt from this policy.
(2) Office and facility renovations. Office and facility renovations are permitted only for approved projects that are part of the Credit Union’s Board approved 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 member use. Renovations must be in all regard consistent with the Credit Union’s branding.
(3) Aviation or other transportation services. This category includes charter fees, tickets, slip or docking fees, vehicle installment payments, reservation, and travel agent expenses, and similar expenditures associated with transportation services (e.g., airline, train, rental cars, or vans). Mileage reimbursable according to current Internal Revenue Service mileage rates is exempt from this policy. Transportation services in an amount less than $20,000 per instance, and $100,000 on an annual aggregate basis per individual, are exempt from this policy. The principal executive officer 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.
(4) Tax gross-ups. This category includes any reimbursement of taxes owed with respect to any compensation.
(5) Other similar items, activities, or events for which the Credit Union may reasonably anticipate incurring expenses or reimbursing an employee for incurring expenses. Expenditures related to other items not listed in the preceding categories are exempt from this policy in an amount less than $20,000 per instance, and together with all expenditures permitted under this policy, may not exceed $100,000 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 an ECIP recipient to provide products and services to its members and community are not excessive or luxury expenditures.
The principal executive officer may establish or 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 must 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.
Enforcement and Oversight
This policy is the responsibility of the Credit Union’s Board of Directors (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.
Any exception or violation of this policy must be promptly reported to the Credit Union’s (i) principal executive officer, (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 EthicsPoint, the Credit Union’s Internal Auditor, or the Chair of the Board of Directors.
The credit union will comply with any record retention requirements as applicable.
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 ECIP recipient’s principal executive officer or principal 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.