ALLOCATION OF PROGRAM EXPENDITURES

By Michael Shultz, CPA - Manager

The FASB Accounting Standards Codification Functional Reporting of Expenses Topic requires the presentation of information about expenses to be reported according to functional classification, such as major classes of program services and supporting activities. Further, expenses that relate to more than one program or supporting activity should be allocated amongst the appropriate functions.

Some organizations only classify as program services those expenses that are specifically identifiable as such, i.e. grants, scholarships, or other direct expenses incurred in connection with a given event. Whereas program services are defined as "the activities that result in goods and services being distributed to beneficiaries, customers, or members that fulfill the purposes or mission for which the NFP exists," staff time devoted to delivering and evaluating such grants and events can and should be allocated to program services expense.

If staff time can legitimately be allocated to efforts spent considering and awarding grants and directly monitoring an organization's program service efforts, such allocations would favorably reflect the amount of expense devoted directly to the furtherance of the organization's mission in its reporting to stakeholders and the public.

Of course, should you have any questions regarding appropriate means to measure and allocate expenses associated with your organization's programmatic efforts, the professional staff at Blue are happy and eager to assist you.