Louisiana Administrative Code › Title 28 - EDUCATION › Part XLI - Bulletin 1929-Louisiana Accounting and Uniform Governmental Handbook › Chapter 6 - Measurement Focus and Basis of Accounting › Section XLI-609 - Government-wide Statements-Reporting of Expenditures

Current through Register Vol. 50, No. 6, June 20, 2024
A. Governmental entities are required to
				present their government-wide financial statements on the accrual basis of
				accounting. Thus, the statement of activities reflects the expenses of the
				entity or the reporting period. Entities are required to report all expenses by
				activities and programs (by function), except certain indirect expenses, as
				explained below. GASB has defined direct expenses as those that are
				specifically associated with a service, program, or department and thus are
				clearly identifiable to a particular function. Direct expenses include both
				operating and non-operating expenses, including depreciation and amortization
				of assets.
B. Functions, such as
				general administration or data-processing services, may include indirect
				expenses of other functions. Governmental entities are not required to allocate
				indirect expenses to other functions, but may choose to do so. If indirect
				expenses are allocated, direct and indirect expenses should be presented in
				separate columns. A column totaling direct and indirect expenses may be
				presented, but is not required. Indirect expenses may be allocated to any of
				the primary government's functions. Although there are no standards for
				determining an allocation methodology, there should be a reasonable basis for
				expense allocations.
C.
				Depreciation and interest expense should be included in the statement of
				activities as follows.
1. Capital Assets that
				can be Specifically Identified with a Function. Depreciation should be included
				in the direct expenses of that function.
2. "Shared" Capital Assets. Depreciation
				should be prorated as a direct expense of the appropriate functions on some
				reasonable allocation basis.
3.
				Capital Assets that Essentially Serve all Functions. Depreciation is not
				required to be included in the direct expenses of the various functions, but
				may be reflected as a separate line captioned "unallocated depreciation" in the
				statement of activities or as part of the general government function. If an
				entity chooses to use a separate line in the statement of activities to report
				unallocated depreciation expense, it should clearly indicate in the footnotes
				to the financial statements that this line item does not include direct
				depreciation expenses of the other functions. Because school buildings often
				serve multiple functions, many school districts report the depreciation as
				"unallocated depreciation" for these assets.
4. General Infrastructure Assets.
				Depreciation should not be allocated to the various functions, but should be
				reported as a direct expense of the function that the reporting government
				normally associates with capital outlays or as a separate line in the statement
				of activities.
5. Interest Expense.
				Interest on general long-term liabilities, including interest on capital leases
				or other vendor financing arrangements, should be considered an indirect
				expense. Interest on long-term debt should be included in direct expenses only
				when borrowing is essential to the creation or continuing existence of a
				program.