Entertainment Expense Policy

You define an entertainment expense policy to manage entertainment and gift expenses for which employees are reimbursed.

Your company must comply with laws and regulations and guard against inappropriate expenditures that may arise when employees entertain or give gifts to customers. To assist with this effort, you can define entertainment spending rules, enable entertainment policy violations, and capture information about event attendees and gift recipients.

Here's how you can define and manage entertainment policies:

In the Setup and Maintenance work area, select the following:
- Offering: Financials
- Functional Area: Expenses
- Task: Manage Policies by Expense Category
Select Entertainment from the Create Policy list to go to the Create Entertainment Policy page.

When you define an entertainment expense policy, you perform the actions as described in the following sections.

Determine Whether to Capture Number of Attendees for Expense Lines Above the Specified Amount

You can decide whether to capture the number of attendees only when expenses surpass the designated limits. To do this, select the option Capture number of attendees for expense lines above the specified amount.

After you use this option, employees are required to enter the number of attendees only when an expense is over the limit. If the expense amount is within the designated limit, entering the number of attendees is optional.

If your company needs to capture other attendee information, such as attendee names, or enforce rate limit policies for Entertainment expenses, then select the Capture attendee information option.

Specify Attendee-Related Information to Capture

You decide which of the following event attendee information to capture in the Add Attendees dialog box. You can do it by selecting any of the following check boxes in the Enable Attendee Information section on the Create Entertainment Policy page:

Require attendee amount: If selected, employees are required to enter amounts that were actually spent on event attendees.
Require employee name: If selected, employees are required to enter at least one employee as an event attendee.
Display employee attendee information: If selected, an Employees section is visible in the Add Attendees dialog box.
Display nonemployee attendee information: If selected, a Nonemployees section is visible in the Add Attendees dialog box.

Define Types of Rate Limits and Number of Currencies

In the Rate Definition section on the Create Entertainment Policy page, you decide whether to enable rate limits for the entertainment expense policy. If you enable them, you can:

Select the type of rate limit, whether single instance, yearly, or daily.
Specify whether the entertainment expense policy rate is defined by a single currency or multiple currencies.

Note: If a currency rate conversion is necessary to verify a policy rate limit, you must define a conversion rate in Oracle Fusion General Ledger.

Determine Whether to Include Attendee Types as the Rate Determinant

A rate determinant for an entertainment policy determines the policy rate amount limit that an employee can be reimbursed for entertainment or gift expenses. An entertainment expense policy has one rate determinant, an attendee type (employee or nonemployee).

In the Rate Determinants section on the Create Entertainment Policy page, you decide whether to include types of attendees as the rate determinant. To include them, you can define different policy rates for different attendee types, such as:

Employee

If selected, Role is enabled for selection.

You can select Role to enforce single, daily, and yearly limits for entertainment expenses based on employee grades. If multiple employee attendees are claiming the entertainment expense, enabling this option enforces limits based on each attendee's grade.

When you enable Role, the Role Type field is automatically populated with Grade.

At the time of expense entry, the employee grade is derived from the system and applicable rates are identified. If there are no rates for the employee’s grade, the rate defined for All others on the Create Rules page is used.
Nonemployee Attendee Type
- Public sector attendees
- Private sector attendees

When you select rate determinants, the application applies the defined limits on the attendee amounts. If you don't define rate determinants, then the application enforces the rate limit on the total receipt amount and doesn't enforce a limit per attendee.

If you don’t select the rate determinants, then the rate limit is applied to the receipt amount.

For example, if you define an entertainment policy with a daily sum limit of 100 USD without selecting the rate determinants, the application enforces a daily limit of 100 USD on the total receipt amount across all the expenses submitted by the employee for a given date for the associated expense type.

For example, consider the following scenario:

Field	Value
Capture attendee information	Selected
Rate Definition	Enabled
Rate Limit – Daily sum limit	Selected
Rate Determinants	Not Selected
Policy Enforcement
Policy violation warning - Warning Tolerance Percentage	10%
Prevent report submission - Error Tolerance Percentage	20%
Daily sum limit	200 USD

With the above setup, if an employee submits an expense report, the application enforces a daily limit of 200 USD on the total receipt amount across all the expenses submitted by the employee for a given date for the associated expense type.

Davis submits an expense report with him and Frank added as attendees of an event. The total amount reported was 250 USD, with the amount split equally between both attendees.

Since the policy doesn't have rate determinants enabled, the daily limit is enforced on the total amount. In this case, since it is above the defined error tolerance amount of 240 USD, the application will display a policy violation error message when Davis tries to submit the report.

If you select employee or nonemployee as the rate determinant, then the rate limit is applied per attendee.

For example, if you define an entertainment policy with a daily sum limit of 100 USD and Employee as a rate determinant, the application enforces a daily limit of 100 USD per employee attendee for that expense type for the given date across multiple reports.

For example, consider the following scenario:

Field	Value
Capture attendee information	Selected
Rate Definition	Enabled
Rate Limit – Daily sum limit	Selected
Rate Determinants	Employee Selected
Policy Enforcement
Policy violation warning - Warning Tolerance Percentage	10%
Prevent report submission - Error Tolerance Percentage	20%
Daily sum limit	200 USD

With the above setup, if an employee submits an expense report, the application enforces a daily limit of 200 USD per employee attendee for that expense type for the given date across multiple reports.

Davis submits an expense report for 250 USD with him and Frank as attendees, with amounts equally split between both (Davis: 125 USD, Frank: 125 USD).

Frank adds the same expense for 250 USD, adds him and Davis as attendees, and splits the amount equally between both (Davis: 125 USD, Frank: 125 USD). Since the daily limit per attendee is 200 USD with an error tolerance of 20%, the maximum reimbursable amount for the day per attendee is 240 USD. As 125 USD was already submitted for both Davis and Frank, Frank can only submit expenses of 115 USD each for these attendees. So, the application will display an error that both attendees are above the policy limit.

Determine Whether to Enforce the Entertainment Expense Policy and How

In the Policy Enforcement section on the Create Entertainment Policy page, you decide whether to enforce the entertainment expense policy. To enforce it, select one of the following:

Reimburse only the rate limit amount when an expense exceeds the defined rate. For example, if the rate limit is 25 USD for a gift to a customer and an employee spends 30, he's reimbursed 25.
Generate a policy violation when an expense exceeds the defined rate.
- Warning: A percentage is used to calculate a warning. The warning tolerance amount is calculated as follows:
```
Policy Rate * (1+Warning Tolerance/100)
```
  If you submit an expense in a report that has an amount that's greater than the warning tolerance, you will see a warning if the Display warning to user check box is selected in the Policy Enforcement section on the Create Entertainment Policy page.
  
  Note: A warning is always displayed to the approver, whether or not the Display warning to user check box is selected.
- Error: A percentage is used to calculate an error. The error tolerance amount is calculated as follows:
```
Policy Rate * (1+Error Tolerance/100)
```
  If you submit an expense in a report that has an amount that's greater than the error tolerance, you're prevented from submitting the expense report.

Define Rate Limit Amounts

After you finish defining the entertainment expense policy and save it, you can then define entertainment rate limit amounts in the Create Rates dialog box.

Note: Rates with overlapping start and end dates are invalid.

Associate the Entertainment Expense Policy with an Expense Type

Before you can associate the entertainment policy with an expense type, you must first activate the policy from the Manage Policies by Expense Category page. You can do it by selecting the policy and then selecting the Activate option from the Actions menu.

The final sequence of steps is as follows:

On the Create Expense Report Template page, create a template for entertainment or select an existing entertainment template.
On the Expense Types tab on the Create Expense Report Template page, create an entertainment expense type.
In the Create Expense Type dialog box, create an entertainment expense type.
On the Policies tab in the Create Expense Type dialog box, select the entertainment expense policy, specify the start date, and optionally the end date.

After the entertainment policy rate is set, a violation is raised when an employee submits a report that contains an expense that violates the policy.