Problematic Expense Guide - A to Z

• Lavish/Extravagant Expenses – The payment or reimbursement for lavish, extravagant or luxury expenses where more reasonable options are available that meet our needs is a prohibited use of University funds. In addition, it is also prohibited to use University funds in a careless manner, or in a manner that provides little or no benefit to the University.
  
  
  • Examples:
    • Gourmet or High-end dining at a cost per person that is not consistent with UNM Policy.
    • Excessive meal tips (ex 35-40%)
    • $300 headphones for online business meetings
    • $6,000 sofas
    • Luxury Travel, such as higher than economy airline tickets when economy seats are available, high-end or resort lodging when more reasonable options are available, luxury automobile rentals when not necessary to conduct University business.
      
      
  • The Reason this is Unallowable – All University funds regardless of source are Public Funds belonging to the taxpayers of New Mexico. Wasteful spending is one of the most common misuses of New Mexico Public Funds and often results in major scandals and reputational damage to New Mexico Governmental entities through negative media coverage.  Such unwanted, negative media attention usually results in Special Audits by the Office of the New Mexico State Auditor, the Office of the New Mexico Attorney General, and the UNM Internal Audit department.  Consequently, wasteful spending is also one of the most common audit findings found in audits of New Mexico Governmental entities like the University.  University expenses must be reasonable in the eyes of a prudent person in order to be allowable.  While this doesn’t mean we are required to purchase poor quality goods and services, we are, however, prohibited from purchasing unnecessarily luxurious or extravagant goods and services.  Using University funds to pay for unnecessarily high-priced goods or services where more reasonably priced options are available and meet our needs would constitute a waste of University resources under State law and will result in audit findings.  Under New Mexico State Auditor statutes, waste is defined as “…the act of using or expending resources carelessly, extravagantly, or to no purpose."(NMAC 2.2.2.7(W). 
    
    
  • Allowable Exceptions:
    • Luxury travel may be allowed when no other economical options are available (must be documented in the Business Purpose of the transaction) – ex. only high-end airline seats, hotel rooms were available, at the time of booking, etc.
      
      
  • Possible Allowable Alternatives - Try this Instead:
    • If a unit has funds available at the UNM Foundation, the Foundation may be able to pay for these expenses directly. With the UNM Foundation existing as a legally separate Non-Profit entity and not a governmental entity like the University, New Mexico government spending restrictions do not apply to funds that are disbursed directly by the Foundation.