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

2. 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

3. 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

4. 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:

5. Office of the Senior Associate Vice President for Finance Proprietary and ConfidentialPage 5 How we identify functional categories  The EAS account string: UN..617002.C100001.G.ADM.FB.000000.000000 http://financeoffice.gwu.edu/comptroller/fss/docs/NaturalAccounts.pdf  EAS provides initial grouping of expenditures in designated ‘buckets’  Some groups are combined or allocated for reporting  Analytical review for consistency and reasonableness

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

7. 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.

8. 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

9. Office of the Senior Associate Vice President for Finance Proprietary and ConfidentialPage 9 Questions??? Contact Information: Sharon Heinle Assistant Comptroller 6-1087 sheinle@gwu.edu