By CHERYL DAHLE I New York Times May 26, 2005
Q. The boss treats you, some co-workers and an important out-of-town client to dinner at a four-star restaurant on the company expense account. As the evening passes, the client heads back to her hotel and your boss departs, leaving you and your buddies sipping drinks at the bar. Should the company pay for the margaritas?
A. Technically, the business purpose of the evening - cultivating a relationship with an A-list client - is over, says Arthur Gross-Schaefer, a lawyer and rabbi who teaches ethics and spirituality to M.B.A. students at Loyola Marymount University in Los Angeles. "Once the client has left, there is not a legitimate business expense," he said, "unless there is an explicit agreement that as a result of good work that the rest of the evening's libations are a reward of some sort."
Q. What if you and your colleagues are talking about work?
A. Extending the evening clearly has social value to you. But it's a bit of a stretch, Professor Gross-Schaefer said, to argue that your late-night, post-repast conversation (fueled by multiple drinks) has much value to your company. Better to conservatively interpret the business purpose of the evening as being limited to fraternizing with the client, not your colleagues, he said. "You simply don't want to risk your reputation or the perception of your ethical fiber," he said, "for the sake of a few free drinks."
Q. Would sliding a few extra Bloody Marys past accounting really wreck a reputation at most companies?
A. It might. Most companies will look at an offense in this vein - even one for a minor amount - as evidence of a lack of ethics that could lead to bigger problems, Professor Gross-Schaefer said. He often illustrates this point in his classes with the story of a fellow who was being recruited by two prestigious law firms in the Los Angeles area. The candidate flew out to interview with both firms, then charged the flight to both companies and pocketed the extra cash. The firms, which had several partners who socialized, found out about his profiteering. Neither offered him a job.
Q. Doesn't a lot depend on how a company defines acceptable expenses?
A. Corporate attitudes on expenses vary widely, said John Putzier, founder and president of FirStep Inc., a human resources consulting firm based in Prospect, Pa. "I've had some client companies that have full-time people who do nothing but go though expense reports with a fine-toothed comb," Mr. Putzier said. "But others are just loosey-goosey."
Mr. Putzier once worked as a consultant for a health care company whose head marketing manager was fired for hiding on his expense report the charges for movies he watched in his hotel room. The chief executive, an evangelical Christian, was particularly concerned about the content of the movies, which were explicit sex films. "This was a doubly stupid move," Mr. Putzier said. "Not only did the guy try to sneak something through on the expense report, but he totally misread the culture. Certainly, the C.E.O. wasn't requiring that the marketing guy be a Christian, but he did feel pretty strongly about, 'Hey, I'm not paying for your porno.' "
Q. What should you do if the corporate culture is more permissive than the written policy?
A. Be careful when you make these judgments, Professor Gross-Schaefer said. There's a difference between following your boss's lead and listening to co-workers who assure you that everybody charges an occasional personal lunch to the company to make up for working long days. "It's never a good idea to rely on pointing fingers at others' behavior to justify your own," Mr. Gross-Schaefer said.
Q. Is there a good rule of thumb in making these decisions?
A. Behave as if all of your expense reports will receive public scrutiny, Mr. Putzier said. For employees at DCI, a marketing firm in New York that helps communities court investment and tourism, that really happens. At each monthly meeting for the 39 staff members, one employee is chosen as the temporary chief financial officer, said Rob DeRocker, executive vice president of the firm. That person meets ahead of time with the controller and presents the financial statements for the month, including all employee expenses that can't be billed back to clients. Because employees share in profits whenever the amount rises above a designated figure, everyone is motivated to keep expenses down, Mr. DeRocker said.
"People will ask each other, 'Did you have to use FedEx that much for this month?' " he said. "Everyone is accountable to everyone else."
Q. How can you be sure that you're in safe territory?
A. If there is any question about whether an expense is legitimate, cover it yourself, then discuss reimbursement later, Mr. Gross-Schaefer said. He was recently in Hawaii on vacation and wound up interviewing over lunch a prospective faculty member for the university. While the lunch was clearly a business expense, he didn't want to have a meal from a restaurant in Hawaii appear as a red flag on his report. So before turning it in, he ran the expense past his dean. "It's always a good idea to ask," Professor Gross-Schaefer said. "That way, if it gets challenged, you've been up front from the start. They can question the charge, but they can't question your integrity."