Point-Counterpoint: Moving from Itemized Receipts to Per Diem

Point-Counterpoint: Moving from Itemized Receipts to Per Diem

By: James Russell-Field, Director of Administrative Services, Fairfield-Suisun Sewer District and Jonathan Foster, CPA, Partner, Davis Farr LLP

The Finance team is a common champion of efficiency, accountability, and transparency. But when it comes to work-related travel, many Finance departments are still struggling with a frustrating practice: itemized receipts for meal reimbursements. While intended to promote fiscal oversight, this practice often undermines interdepartmental relationships, uses up valuable staff time, and distracts from more pressing issues. If you’re interested in moving from itemized receipts to per diem, this article may help your decision!

Pain Points with Itemized Receipts

Requiring itemized receipts for meals is a reasonable safeguard to ensure taxpayer and ratepayer dollars are spent appropriately and in accordance with policy. But in practice, it can cause administrative headaches and diminish trust between Finance and other departments.

Consider this all-too-familiar scenario. A colleague returns from a multi-day training. Despite your friendly reminders, they forget a few itemized receipts for a $4 coffee at the airport and a $15 lunch on the way home. You reach out to them to collect the missing receipts, only to learn they didn’t get one. You explain that you’ll need a “Certification of No Receipt” form to process reimbursement. Two weeks have gone by with no response. When your colleague follows up about the delay in reimbursement, you remind them that the form is still missing. They finally submit the form, and you overhear later that they’ve vented to their department about how uncooperative Finance can be.

Or perhaps your colleague enjoys a glass of wine at dinner.  Your policy most likely does not allow reimbursement for alcoholic beverages, and now time must be spent deducting the cost of wine from the receipt, and Finance must cross check the math to the submitted reimbursement request.

Let’s recap the situation. Hours of staff time were spent trying to process $19 in meals. Tension now exists between departments. You were simply enforcing policy, but the experience left both parties frustrated.

Is this the best way to handle meal reimbursements on travel?

This kind of back-and-forth, while minor in dollars, creates a disproportionate drain on time and morale. It leads to frustration, delayed reimbursements, and could put a sour note at the end of a valuable training or professional development opportunity.

The Case for Per Diem

The federal General Services Administration (GSA) publishes per diem rates for meals and incidental expenses across thousands of U.S. locations, updated annually. These rates are widely used by federal agencies and increasingly by state and local governments. The per diem approach is simple: employees are reimbursed a flat rate for meals per day, without the need for receipts, provided travel is for approved business purposes and within policy guidelines.

For my own personal approach, the backup we require for per diem is a copy of the final training program/agenda/itinerary, because per diem is reduced for training-provided meals, and a screenshot from https://www.gsa.gov/travel/plan-book/per-diem-rates showing the per diem rates for the locality of travel.

Switching to per diem offers several advantages:

• Saves Time: Eliminating receipt collection and review dramatically reduces the administrative burden on both employees and finance staff.
• Builds Trust: Per diem policies reflect a baseline of trust in employees while still maintaining clear limits and compliance. When expectations are well-documented, it promotes fairness and consistency.
• Equity and Fairness: Using a standardized per diem helps level the playing field. Whether someone is a seasoned department head or a new line staff member, they receive the same reasonable allowance for meals, regardless of their ability or willingness to spend out-of-pocket.
• Audit Documentation:  Have your auditors ever selected a sample of expense reports, only to find a receipt missing?  Adopting a per diem rate avoids the risk of misplacing a receipt and receiving a finding from your auditors. 

The following demonstrates the information necessary to complete an expense report for travel to Sacramento, CA.  The employee can efficiently use the information from https://www.gsa.gov/travel/plan-book/per-diem-rates to populate expense reports.  Travel days and non-travel day expenses are explicit and can easily be validated by accounting personnel to quickly process and approve reimbursements.

The Flip Side – Considerations, Barriers to Adoption, Addressing Concerns

One of the most common objections to per diem is the perceived risk of over-reimbursement and paying more than the employee actually spent. But that risk must be weighed against the very real costs of staff time, strained relationships, and employee frustration. In most cases, the GSA rates are modest and regionally appropriate. Agencies also have the flexibility to set policies that limit reimbursement to partial days or adjust for meals provided at conferences.

Others worry that adopting per diem means losing control over how funds are spent. With itemized receipts, Finance teams can monitor actual expenses, spot unusual purchases, and reinforce accountability down to the line item. But with proper policy and internal controls, such as requiring pre-approval of travel, limiting eligible events, and tying per diem to actual travel days, this concern can be largely mitigated.

At the end of the day, there isn’t one right answer. Requiring the itemized receipts instead of per diem remains a completely reasonable policy. Finance leaders need to evaluate the tradeoffs of policy implementation and prioritize their agency’s highest needs and risks. For some, ease of using per diem will outweigh concerns about overpayment. For others, the accountability of itemized receipts may carry more weight.

Moving Forward

Shifting to per diem doesn’t require reinventing the wheel. Many templates, sample policies, and implementation guides are available from agencies in the CSMFO network! Check out the CSMFO Knowledgebase (https://members.csmfo.org/home) for discussion, sample policies, reimbursement forms, and more!

Note that per diem is also allowed for lodging. Policies can vary from reimbursing hotels at cost, reimbursing hotels at a conference rate and the IRS daily lodging rate for non-conference travel, or reimbursing at the IRS daily lodging rate only.

At its core, the switch to per diem is about aligning our internal practices with the values we already champion. It’s a small policy change but it comes with potentially meaningful impact on Finance Department operations and relationships.

James Russell-Field is the Director of Administrative Services for the Fairfield-Suisun Sewer District. James has served on various committees and roles supporting CSMFO. Before the District, he worked with the Department of Interior, the City of Thousand Oaks, and the City of Benicia. On weekends, you can find James mountain biking through Northern California.

Jonathan Foster, CPA, is a partner at Davis Farr LLP with 18 years of experience specializing in local government audit services. Throughout his career, he has focused primarily on auditing cities and special districts across California. In addition to his audit work, Mr. Foster teaches a capital asset course for the California Society of Municipal Finance Officers and is a frequent presenter at various conferences. He also currently serves as Chair of the CalCPA Governmental Audit and Accounting Committee.