Office of the Senior Associate Vice President for Finance Financial Statement Presentation: Functional Expenses Finance Directors Meeting May 18, 2010

Office of the Senior Associate Vice President for Finance Proprietary and ConfidentialPage 2 Functional Expenses Defined  Categorization of expenses based on purpose for which expense is incurred (e.g., Instruction, Student Aid) rather than the type of expense (e.g., Salary, Supplies)  FASB/AICPA require only broad categories of “Program” and “Supporting Services”  Program - the activities that result in goods and services being distributed to beneficiaries, customers, or members that fulfill the purposes or mission for which the organization exists  Supporting Services - all activities of a not-for-profit organization other than program services

Office of the Senior Associate Vice President for Finance Proprietary and ConfidentialPage 3 Why is this important?  Functional expenses reported in variety of places:  Financial Statement Footnotes (GAAP requirement)  IPEDS  Form 990  Ad hoc surveys  Interested stakeholders  Board/Management  Donors  Faculty  Students  Regulators

Office of the Senior Associate Vice President for Finance Proprietary and ConfidentialPage 4 GW’s Financial Statement Presentation Note 13 – Program and Supporting Activities Expense The Consolidated Statements of Activities include the following program and supporting activity expenses for the years ended June 30, 2009 and 2008, respectively:

Office of the Senior Associate Vice President for Finance Proprietary and ConfidentialPage 5 How we identify functional categories  The EAS account string: UN C G.ADM.FB  EAS provides initial grouping of expenditures in designated ‘buckets’  Some groups are combined or allocated for reporting  Analytical review for consistency and reasonableness

Office of the Senior Associate Vice President for Finance Proprietary and ConfidentialPage 6

Office of the Senior Associate Vice President for Finance Proprietary and ConfidentialPage 7 Commonly Used Functions ACS – Academic Support ADM – Institutional Support (aka “Admin”) AUX – Auxiliary Enterprises INP – Investment Properties (Independent Operations) INS – Instructional & Department Research SP# – Sponsored Projects (direct expenses) SPA – Sponsored Project Administration STS – Student Services STA – Student Aid Allocated Functions: MOP – Maintenance/Operation of Plant CAP – Capital Expenditures DSV – Debt Service TEC – Technology Allocated Functions require rational and consistent basis for spreading expenses across the reported program and supporting services.

Office of the Senior Associate Vice President for Finance Proprietary and ConfidentialPage 8 Where do you come in?  Requesting new orgs  Consider ‘primary’ functional activity  Segregating new/significant activities  Academic Advising  GWorld 2.0 initiative  Unified Web Presence  Sustainability  Identifying shifting focus in existing orgs  Both C and R funds

Office of the Senior Associate Vice President for Finance Proprietary and ConfidentialPage 9 Questions??? Contact Information: Sharon Heinle Assistant Comptroller