How should a nonprofit handle travel and expense reimbursements?

• A. Establish a travel policy with approved documentation, per diem, receipts, and timely reimbursement.
• B. Reimburse without receipts to speed processing.
• C. Use a flat, blanket reimbursement without policy.
• D. Reimburse only after a full audit.

Answer: (A)

The main idea is to establish solid internal controls for travel and expense reimbursements by having a clear travel policy that specifies what is allowable, requires approved documentation, uses per diem for meals and incidental costs where appropriate, and ensures reimbursements are made promptly. This approach creates transparency, standardizes costs, and provides an auditable trail that supports proper stewardship of nonprofit funds and compliance with IRS substantiation rules. Using per diem helps simplify reimbursements and keep costs predictable, while receipts for other expenses verify actual costs. Reimbursing without receipts undermines accountability, and a blanket flat reimbursement without policy invites inappropriate spending and lacks necessary controls. Delaying reimbursements until a full audit is impractical and can strain volunteers and staff. Together, these elements promote responsible financial management and safeguard the organization’s assets.