All expense reports in Chrome River require a concise but detailed business purpose. A business purpose is defined as one that supports or advances the university's goals, objectives, and mission and adequately describes the expense as necessary, reasonable, and appropriate for the university.
Can an external audience who knows nothing about you, your department, or the trip understand why the expense was warranted? Units must ensure that expense reports and supporting documentation include complete and transparent information that can be understood by both internal and external reviewers (managers, auditors, IRS, FOIA, etc.).
In accordance with IRS rules on Accountable Plans, expenses incurred by system employees must serve a business purpose. This means all expenses must provide a benefit to the institution, not a personal benefit to the employee.
Elements of an Appropriate Business Purpose
When requesting a payment, reimbursement, or justifying an expense, the business purpose should clearly describe the reason for the expenditure. Providing the 5 "W's" (Who, What, Where, When, and Why) in the business purpose field will comprise an appropriate response for each expense line in Chrome River.
As described in the table below, much of the information needed for each expense is covered by the information entered on the report header and/or individual expense lines.
WHO | This is typically answered by the employee submitting the expense report. When an expense is incurred on behalf of someone else, such as a non-employee, the individual's name should be included in the report. |
WHAT | This is usually answered by the attached supporting documentation and the expense tile selected for the expense line. |
WHERE | The location of the expense is often identified in supporting documentation. |
WHEN | The transaction date will often identify the when. |
WHY | The "why" is the most important piece of information to support a business need. This describes why the university is paying for the expense and how the expense supports the mission of the university. |
Constructing a Business Purpose
- Describe the purpose of the expense.
- State the facts by using action verbs that describe the activity.
- Clearly state how the expense benefits the university.
- Describe any unique or unplanned circumstances related to the expense that requires further explanation.
Merely re-stating WHAT is being purchased, instead of describing WHY the payment is being requested and HOW it benefits the university, is inadequate.
Most transactions fall under one of five common themes:
- Presenting Knowledge
- Professional Development
- Recruitment
- Networking
- Donor Solicitation
Insufficient | Appropriate |
Conference | Attending 2025 Medical Equipment Training Conference, Orlando, FL. This conference provides professional development and networking opportunities with industry peers in the Higher Education Field. |
Supplies | Various supplies purchased to repair the air handler located in the Financial Operations building. |
Mileage | Monthly business-related travel incurred as part of the Ag in the Classroom presentation to various school-age children across Illinois. |
Registration | Conference Registration to present grant research findings on COVID-19 vaccine. |
Lodging | Lodging purchased for visiting lecturer, Joe Smith. Mr. Smith presented a session at the Business and Finance Symposium. |
Meal | Donor solicitation lunch with Sarah Smith |
Membership | This membership will provide certification for a program required to complete my research. |
University Payables does NOT need to see
- Repeated information that is already included in the transaction or attached supporting documentation.
- History of the university or unit
- A copy and paste narrative added to every expense report from your unit
- The description of the event provided by the event organizers
Reason for Business Purpose
The University of Illinois System's financial transaction documentation must consistently meet and comply with legal, governmental, and auditing requirements. Providing thorough, complete transaction justifications and supporting documentation protects and benefits the system in the following ways:
- Minimizes the risk of penalties and fines due to unsubstantiated business expenses.
- Ensures compliance with legal and regulatory requirements.
- Establishes adequate and consistent documentation standards for all financial transactions.
- Provides an independent and efficient source for obtaining transactional information.
- Complies with tax regulations that specify requirements for nontaxable reimbursements under an accountable plan versus reimbursements taxable to employees.
- Minimizes reputational risks and adverse public perception.
A detailed, relevant business purpose will help reimbursements be processed more efficiently, with less chance of the expense report being rejected.
Contact
If you have questions, please submit a Service Request Form to University Payables.
