A. Purpose
The purpose of this policy is to establish parameters and internal controls governing the expenditures of MERCO Credit Union. Expenditures of MERCO Credit Union should be customary, prudent, consistent with applicable laws and regulations, and reasonably related to MERCO 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.
MERCO Credit Union prohibits excessive or luxury expenditures. Any expenses that could be considered excessive or luxury require approval by the CEO.
Routine operating expenses, capital expenditures, and other reasonable expenses are not prohibited by this policy.
B. Authority
MERCO 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.
C. Responsibility
This policy is the responsibility of MERCO 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.
D. Scope
This policy applies to all employees, officers, and directors of MERCO Credit Union about any expenditure of MERCO Credit Union. In making any expenditure on behalf of MERCO Credit Union, employees, officers, and directors should consider whether the expenditure is an excessive or luxury expenditure that is prohibited under this policy.
E. 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 MERCO Credit Union’s business operations:
- 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 $10,000 per instance, and $25,000 on an annual aggregate basis per individual, are exempt from this policy.
- Office and facility renovations. This category includes costs and allowances for office renovation, including expenditures related to furniture, art, office personalization, interior finishing, design and decoration, and similar expenditures. Employee offices, including executive offices, shall be appropriate for the employee’s position but not ostentatious in size, furnishings, or decoration. Materials used to construct or renovate offices and facilities shall be selected based on their quality, appearance, cost, and durability, considering their intended use, and avoiding opulence. All expenditures for constructing, renovating, or furnishing offices must be approved by the Board of Directors as per the Capital Expenditures Policy. Office and facility renovations expenditures in an amount less than $1 million per instance, and $50,000 on an annual aggregate basis per individual, are exempt from this policy.
- 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).
Air travel on Credit Union business shall be by commercial airline, commercial train, rental car, or automobile. Air travel must be approved by the CEO. First class travel is prohibited. Mileage reimbursable according to current Internal Revenue Service mileage rates is exempt from this policy. Transportation services in an amount less than $10,000 per instance, and $25,000 on an annual aggregate basis per individual, are exempt from this policy.
The 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 the Audit Committee no less frequently than annually.
- Tax gross-ups. This category includes any reimbursement of taxes owed with respect to any compensation. This category does not apply to tax equalization agreements for employees subject to tax from a non-U.S. jurisdiction. MERCO Credit Union shall not provide tax gross-ups.
- Other similar items, activities, or events for which MERCO 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 $10,000 per instance, and together with all expenditures permitted under this policy, may not exceed $25,000 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 customers and community are not excessive or luxury expenditures.
The CEO 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.
F. Exceptions or Violations
Any exception or violation of this policy must be promptly reported to MERCO Credit Union’s CEO, Compliance Officer or Audit Committee. 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 MERCO 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 MERCO Credit Union’s Audit Committee. MERCO Credit Union prohibits retaliation against any employee or officer for making a good faith report of actual or suspected violations of MERCO Credit Union’s code of conduct, laws, regulations, or other Organization 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 MERCO 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 our CEO, Compliance Officer or Audit Committee.
G. Certification
On an annual basis, the ECIP recipient will deliver to the Department of the Treasury a certification, executed MERCO Credit Union’s CEO and CFO, certifying that (i) MERCO 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.
REFERENCES:
Appendix A to 31 CFR Part 35
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