As a participant in the Community Development Capital Initiative Program (the “CDCI”) being administered by the United States Department of the Treasury (“Treasury”), Hope Federal Credit Union (“HOPE”) is adopting this Excessive Expenditure Policy (this “Policy”) pursuant to the requirements of the American Recovery and Reinvestment Act of 2009. Once this Policy has been adopted, a copy of this Policy will be provided to Treasury and the text of this Policy will be posted on the HOPE Web site. Moreover, HOPE will maintain this Policy during the remainder of its CDCI participation, and, in the event the Board of Directors adopts any material amendment to this Policy, within 90 days of such amendment, HOPE will provide the amended policy to Treasury and will post the amended policy on the HOPE Web site.
It is the policy of HOPE 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 business operations of HOPE:
• Entertainment or events;
• Office and facility renovations;
• Aviation or other transportation services; and
• Other similar items, activities, or events for which HOPE 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 HOPE employee or group of employees.
The following policies and procedures shall govern excessive expenditures generally.
II. PROHIBITED EXPENDITURES
Expenditures for entertainment, events or sponsorship of events, office or facility renovations, aviation services or other transportation services, or other similar expenditures will be prohibited where HOPE has not documented its determination that such expenditure either (i) benefits current or prospective members or other sources of new business or serves some other legitimate business development purpose, (ii) serves a bona fide staff development purpose or (iii) serves some other bona fide business purpose.
III. EXPENDITURES REQUIRING PRIOR APPROVAL
The following types or categories of expenditures require prior approval:
• Entertainment, where the expenditure amount exceeds $ 50,000 per item, activity, or event;
• Events or sponsorship of events, where the expenditure amount exceeds $ 50,000 per item, activity, or event;
• Office or facility renovations, where the expenditure amount exceeds $ 50,000 per item, activity, or event;
• Aviation services, where the expenditure amount exceeds $ 50,000 per item, activity, or event;
• Other transportation services, where the expenditure amount exceeds $ 50,000 per item, activity, or event; and
• Other similar items, where the expenditure amount exceeds $ 50,000 per item, activity, or event.
IV. APPROVAL PROCEDURES
For expenditures requiring prior approval under Part III above, such prior approval may be obtained by submitting a written request to the Compensation Committee. Such a request may take the form of an email or facsimile communication and must be directed to each of the Committee members. Any such request must be approved by a majority of the members of the Compensation Committee. Committee members must affirmatively express their approval in writing, which approval may take the form of an email or facsimile communication and may, but is not required to, be given on a preprinted form designed for that purpose. Committee members may, but are not required to, meet together to deliberate before approving any particular expenditure request.
V. CEO AND CFO CERTIFICATION OF CERTAIN APPROVALS
With respect to each expenditure requiring the prior approval of the Compensation Committee, the CEO and the CFO will both certify in writing that the approval of such expenditure was properly obtained.
VI. PROMPT REPORTING OF, AND ACCOUNTABILITY FOR, VIOLATIONS
If any employee of HOPE becomes aware of a violation of this Policy, he or she must promptly report the violation to the Internal Auditor (“Auditor”). Upon receiving such a report, the Auditor must then conduct a discreet investigation, preliminary in nature, of the facts and circumstances giving rise to the allegation. If, after an appropriate investigation, the Auditor concludes there is a substantial likelihood that a violation has occurred, then the Auditor must submit to the Audit Committee of the Board of Directors a written report describing (i) the alleged violation, (ii) the Auditor’s preliminary investigation into the allegation, and (iii) the reasons for the Auditor’s conclusion that there is a substantial likelihood that a violation of this Policy has occurred. Upon receiving this written report, the Audit Committee will conduct a full inquiry into the facts and circumstances giving rise to the allegation.
If, after conducting a full inquiry into the facts and circumstances giving rise to the allegation, the Audit Committee determines that a violation of this Policy has occurred, the offending employee must be appropriately held accountable for the violation, in accordance with existing disciplinary policy.