“Reasonableness” of Business Meals
Q. We are writing a policy regarding Business Meals and wanted to verify DCAA’s position on what is considered “reasonable” to them for a business dinner meal expense. We typically thought it was around $70 per person (including alcohol) but we can’t seem to locate any documentation on this. Is there any written guidance for auditors or elsewhere that documents this?
A. Again, reasonableness is the criteria. We don’t usually see DCAA questioning the amount of per person costs unless it is unusually high. Alcohol is always unallowable but the $70 per person is not an amount we are aware of unless an individual auditor decides to use per diem amounts to define what is “reasonable” which would be unusual. Rather than challenging the amount per person, DCAA is more apt to question the dinner as business related, saying it is unnecessary or is an entertainment expense. You are right to prepare a written policy where all anticipated types of business dinner events are addressed and definitions of which events are business related or more for entertainment.
