As a participant in the Community Development Capital Initiative (the “CDCI”) being administered by the United States Department of the Treasury (“Treasury”), Community Bancshares of Mississippi, Inc. (“the Company”) is adopting this Expenditures Policy (this “Policy”) pursuant to the requirements of the American Recovery and Reinvestment Act of 2009, as implemented by the Interim Final Rule published June 15, 2009, by Treasury. The Company will maintain this Policy during the remainder of its CDCI participation.
It is the overall policy of the Company to prohibit excessive expenditures on any of the following to the extent such expenditures are not reasonable expenditures for staff development, reasonable performance incentives, or other similar reasonable measures conducted in the normal course of the Company’s business operations:
- Entertainment or events;
- Office and facility renovations;
- Aviation or other transportation services; and
- Other similar items, activities, or events for which the Company may reasonably anticipate incurring expenses, or reimbursing an employee for incurring expenses.
This Policy is not intended to apply to bona fide business development or marketing expenditures, provided that the expenditure in question does not involve the conferring of a significant benefit on any employee or group of employees of the Company.
II. POLICY BY CATEGORY
The following policies and procedures shall govern such expenditures:
Entertainment or events
Business Entertainment is an activity that an Officer or Staff Member would use corporate funds for business development purposes relating to current customers, prospective customers or other persons to further enhance the marketing or business development efforts of the Company or its affiliates. The expectation is that all expenses incurred on behalf of the Company and its affiliates would be for Company purposes and/or used for business development purposes. Occasional events such as taking customers or prospects on trips, playing golf, eating dinner and taking customers or prospects to other events the customer/prospect would find pleasurable is a necessary part of the Company’s business development efforts and is not deemed a violation of this Policy. These expenditures should be well documented and detailed as to the benefit derived by the Company and its affiliates.
Office and Facility Renovations
Renovations of facilities and office spaces generally should be an approved amount budgeted by the Company or its affiliate. An exception to this can be allowed if management must deal with an emergency situation, such as an act of nature, and the expenditure is necessary to make the facility operational for either staff or customer use.
Regular office and facility renovations must be approved by the CEO as part of the annual budget approval process. Special office and facility renovations must be approved by the CEO on an as-needed basis.
Officers and staff using air travel on Company business shall use reasonable efforts to minimize the cost to the Company of such travel. Air travel must be coach class unless the duration of the trip and the working requirements of the officer or staff necessitate first or business class travel. All expenditures for first or business class travel must be approved in advance by the CEO.
Expenses for officer or staff use of personal vehicles for Company business will be reimbursed at a rate that does not exceed the published IRS mileage rate. Documentation in support of such use must be provided in accordance with applicable Company policies and procedures.
When needed for Company business, Company personnel may, but are not required to, rent a vehicle if it is less expensive than other available modes of transportation or when travel requirements necessitate having the flexibility of a rental car.
The Company owns a corporate airplane and the Board of Directors has adopted an “Aircraft Usage Policy” which governs the use of the airplane. Any corporate airplane usage should be in accordance with the guidelines set forth in this policy.
Other Activities or Events
Other similar items, activities or events for which the Company may incur expenses, or reimburse an officer or staff member for incurring expenses, which are not specifically addressed elsewhere in this policy, shall be for legitimate business purposes and reasonable in nature and amount.
Generally the Company does not grant performance incentives in the form of travel or entertainment. However, if granted, such performance incentives must not encourage or promote excessive or unnecessary risk-taking or manipulation of financial results. Any performance incentive granted in the form of travel or entertainment must be approved in advance by the CEO.
III. REQUIRED REPORTING
The process for approving and reporting expenditures covered by this policy, as well as the actual amount of expenditures incurred, may be subject to audit by the Company’s internal audit staff to confirm policy compliance.
Any violations or departures from policy requirements shall be promptly reported to the CEO or CFO, unless such violations or departures relate to the CEO or CFO. Violations or departures from this policy by the CEO or CFO should be promptly reported to the Audit Committee. Compliance with this policy is a condition of employment, and any violations thereof may result in disciplinary action.
The CEO and CFO shall certify, at least annually, that the approval of any expenditure under this policy requiring the prior approval was properly obtained with respect to each such expenditure.