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Business and Policy Areas
Business and Policy Areas

Advisory to Assist Public Institutions with IPEDS Expense Allocations

January 29, 2010

NACUBO Advisory Report (AR) 2010-1 provides industry guidance for public institutions completing Part C, "Expenses and Other Deductions," of the Integrated Postsecondary Education Data System (IPEDS) Finance Survey. Part C requires allocation of depreciation, operation and maintenance of plant (O&M), and interest expenses to all other functional expense categories during the 2011 (FY10) collection period and is optional during the current 2010 (FY09) collection period. The current Finance Survey opened on December 2, 2009 and will close to key holders on April 14, 2010.

Public institutions must follow the functional expense definitions as defined by NACUBO in its Financial Accounting and Reporting Manual (FARM) and included in Appendix B of AR 2010-1. A functional classification is a method of grouping expenses according to the purpose for which the costs are incurred. To assist public institutions with an effective, efficient, and economical approach to allocating depreciation, O&M, and interest expenses among the functional expense categories, this Advisory Report steps through a cost allocation approach. Because independent institutions have been allocating such costs for more than a decade, the Advisory Report focuses on methods currently used by independent institutions.

NACUBO's preferred industry guidance is solely for the purpose of completing the IPEDS Finance Survey. At this time there is no recommendation or requirement for expanding the functional expense footnote disclosure to include the allocation of depreciation, O&M, and interest expenses to the functional expense categories. Public institutions, however, should consider the many users of their external audited financial statements and evaluate the possible benefits of having Part C IPEDS survey allocation results, or methodologies, be consistent with, used, or disclosed in general purpose external financial statements or other external reports.

The Advisory Report is available on NACUBO's website.


Sue Menditto
Director, Accounting Policy