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Business and Policy Areas
Business and Policy Areas

Advisory Report

August 11, 2011

Advisory Report 2011-1: Preferred Industry Practice for Reporting VUCS as a Research Functional Expense

NACUBO Advisory Report 2011-01 clarifies when it is appropriate to classify costs associated with voluntary uncommitted cost sharing (VUCS) in the "research" functional expense category in an institution's audited external financial statements. NACUBO's Financial Accounting and Reporting Manual (FARM) defines the functional category of research as including "all expenses for activities specifically organized to produce research, whether commissioned by an agency external to the institution or separately budgeted by an organizational unit within the institution." Some institutions have relied on the term "separately budgeted" and included all amounts budgeted as research whether or not the budgeted amount represents the actual effort expended. Functional expense reporting should not be driven solely by budget allocations, but rather by the actual amounts spent on a particular function.

View the Advisory Report 2011-1 here.


Sue Menditto
Director, Accounting Policy