Q: We are having a recurring problem reimbursing our Lifelong Learning instructors for materials and supplies that they have purchased. If they are paid as independent contractors or have an original receipt for their purchase there is no problem. More and more, however, we have instructors who pull inventory, i.e. bottles of wine, bread-making ingredients or glass beads, from their own stock and they cannot provide us with an original receipt. We have met with Accounts Payable, Internal Audit, Tax Services, Legal and Payroll and have yet to come up with a solution that works. How do our colleagues across the country handle this kind of situation?
A: Typically, for classes that require additional fees for materials, the instructor charges a materials fee. The student pays this fee, and the fee is given to the instructor for purchase of necessary materials.Whether the materials are pulled from existing inventories or not is then not a problem. The contractor has to account for the cost of materials and for income received for those materials when they file their taxes. If you feel you must have a reimbursement of actual expenses, then you should establish a clear policy with instructors that they can be reimbursed only for materials for which they can produce a valid receipt. This is a standard for contractors, and it should not be difficult to explain to contractors why this is the case. Once you have made the process clear to instructors, you need to reinforce it by providing reimbursement for only those materials that have been documented.