Lessons From David Paterson's Expense Reports

Last week new New York Governor David Paterson publicly acknowledged his extramarital affairs. Now his method of payment for these dalliances is being scrutinized.

The New York Comptroller’s Office revealed credit card records for more than 15 months back when Paterson was lieutenant governor. He used his state credit card to cover thirteen questionable hotel stays in Albany, between Jan. 1, 2007 and February 18, 2008, for a tab totaling $2,500. He does not admit to using campaign money to pay for his dates. He is, however, reimbursing his campaign account for two Manhattan hotel charges. More reimbursements may follow.

Even if you are not a political big, the ethical line can blur when writing off business expenses. This dilemma is particularly prevalent in the political and corporate worlds where dining with clients, wooing delegates, and networking with consultants is part of the job. People should know better than to go expense crazy, but it is human nature to push the envelope and opt for nicer things than normal, says Henry Stern, founder of New York Civic, a political watchdog organization. “Spend the company money like you would your own money,” says Stern. “The problem is most people spend their own money poorly, so the rule really is to expense money like you wish you were spending your own money.”

Consider giving any expense questions the “press conference” test, says Marci Alboher, author of One Person/Multiple Careers. “If you'd be embarrassed to disclose an expense in public at a press conference, then maybe you'd want to think twice about considering charging that item or service to your business.” Stern advocates using common sense: Just because you neglected to pack a suit for a business trip, doesn’t mean your company should pay for a nice new one. “When you start drinking on the job then that’s not a travel expense either. A good rule is: Don’t be a pig. Do what is fair and responsible and chances are you’ll be backed up. A $400 John Edwards haircut is not a legitimate expense.”

To know exactly what you are entitled to expense, consult with both the accounting department and your human resources. Some companies issue a company card and others reimburse charges to your personal credit card after you submit an expense report. “The key is tracking it,” says Tom Darrow, founder of Talent Connections, LLC, a  recruiting firm in Atlanta, Ga. “A good company has a process where your boss has to sign off on your expense report and the accounting department looks it over again before reimbursing you.”  If employees know their expenses are being studied they are less likely to be led to temptation.

It seems pretty straightforward but companies need to have detailed policies and set parameters that explain what are appropriate business expenses for hotels, restaurants and per diems so spending doesn’t get out of control, says Darrow. “Staying in the Ritz Carlton (MAR) when there is a Hampton Inn (BX) right there is questionable. The highest classes of car [rental], and business and first class flights aren’t amenities people are entitled to just because they are traveling for the company."

Paterson used his campaign’s American Express Platinum Card (AXP) for his questionable expenses. Many companies issue an AmEx (AXP) protection, and offers corporate rates and other benefits.

Legitimate use of a credit card, can include rewards for your labor. While each company has a different policy, most allow their employees to enjoy frequent flyer and hotel points they acquire while on the job. “This is where you get your perks,” says Darrow. Point taken: The next time Governor Patterson needs to crash at a Quality Inn (CHH), he should probably use those points, or good old cash, and keep that expense to himself.