What Are Your Organization's New Year Resolutions?


By Beth Mellon

The beginning of a new year is a good time to assess the content of your organization’s current policies as well as the enforcement effort required to stay in compliance with those policies.

Document Retention and Destruction Policy
One popular resolution is to be more organized in the New Year. Now is a good time to review your organization’s compliance with its document retention and destruction policy. To ensure that an organization’s documents are managed properly, a written Record Retention and Destruction Policy is necessary and should comply with related provisions set forth in the Sarbanes-Oxley Act of 2002. Once responsible parties are identified and the method and location of storage is determined, the effort required to enforce and adhere to the policy throughout the year should be minimal. Employees and management should be educated about the policy, and processes should be established to ensure that your organization is in compliance with its own internal policies.

Business Expense Reimbursement Policy
Another resolution for the New Year may be to engage in networking activities with business associates or to enhance your technical expertise by attending professional conferences. A business expense reimbursement policy ensures that employees have a clear understanding of, and are reimbursed for, legitimate business and travel expenses. It also provides expense report submission deadlines and specifies documentation requirements to satisfy the accountable plan rules set forth in the Internal Revenue Code. An accountable plan is an arrangement whereby expense reimbursements or expense allowances are excluded from an employee’s compensation and are generally deductible by an employer as a business expense. Expenses reimbursed under an accountable plan are not subject to federal income tax withholding and are not reported as wages on Form W-2. Thus, to avoid unintended tax results, it is critical that employees comply with the organization’s expense reimbursement policy.

The following three requirements must be met for the plan to qualify as an accountable plan: 

1. Business connection. Reimbursements for ordinary and necessary business expenses that are allowable as deductions and that are paid or incurred by an employee in connection with the performance of services as an employee are considered to have met the business connection requirement.
2. Adequate substantiation. Adequate substantiation of reimbursed business expenses is attained by submitting a detailed written record substantiating the time, place, amount and business purpose of the expense.
3. Return of excess advances. An accountable plan requires employees to return any advance exceeding substantiated business expenses. Any advance provided to an employee must be substantiated, and excess advances returned within a reasonable amount of time.

If an organization does not maintain an accountable plan, reimbursements are includable in an employee’s gross income, reported as wages on Form W-2 and are subject to federal income tax withholding and employment taxes.

An organization should establish and maintain a clear, written policy for reimbursing expenses of employees conducting business or traveling on behalf of the organization. Types of expenses that will be reimbursed and require supporting documentation should be identified in the policy.

Disaster Recovery Plan
A good resolution for the New Year is to be better prepared. Whether a natural disaster or a systems shutdown, a disaster could be a disaster to your organization. Disaster recovery planning refers to three types of measures: 

1. Preventive measures focus on preventing a disastrous event from occurring.
2. Detective measures focus on detecting potential disastrous events.
3. Corrective measures focus on getting your systems back on track after a disaster has occurred.

To ensure an effective disaster recovery, a plan to minimize loss and downtime should be in place to deal with recovering and restoring an organization’s operational systems, such as payroll data, secure banking systems and electronic records. A disaster recovery plan should be reviewed annually to assess relevance and to update the roles of all parties involved. Attention to points of failure should be considered, and critical applications should be identified. An inventory of an organization’s technical system assets, including computers, software and other devices, should be taken. Policies and contracts with outside consultants and service hosts should be reviewed, updated and filed. Lastly, roles of the individuals identified to carry out the process should be reviewed and revised accordingly.

The beginning of a new year is an excellent time to review prior-year policies and update as appropriate. It is also a good time to ensure that the policies meet the evolving needs of your organization and that there is compliance with institutional policy.

Schneider Downs can assist you with developing, implementing and reviewing the aforementioned policies for your organization, in addition to assessing your organization’s risk.

Please contact us today.

© 2011 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.


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© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.