Functional Expense Allocation

Expenses that directly relate to a program or service are applied directly to that program, but there are instances where expenses need to be allocated across two or more expense categories.  An example would be if you have grant awards where there are employees work on multiple awards or purchases of supplies are used across multiple expense categories.

An assessment of your allocation methodology should be made at the start of each fiscal year.  

• Determine the best allocation method.
• Evaluate prior years methods to determine if the allocation method need to be revised or changed.

An example of Functional Allocation Accounts and Methods is below.

Expense Type                                                           Allocation Method

Salaries & wages                                                     Time sheets
Employee insurance, benefits, etc.                       Based on salaries and wages allocation
Supplies                                                                     Based on usage or percentage
Building rent, maintenance, utilities, janitorial    Square footage
Vehicle and travel                                                     Expense or time reports of employees involved
Depreciation                                                              Based on asset usage or percentage of usage