Reporting Requirements for Annual Financial Reports of State Agencies and Universities

General Accounting

Loan Programs
Full Cost Recovery

If the enterprise fund is selected for financial reporting of the loan program, a question arises as to whether all costs, directly or indirectly associated with the program, are reported within the fund. For example, should administrative expenses that apply to both governmental and enterprise operations be allocated between the two fund types? Or, should depreciation expense be recorded in the proprietary fund for equipment used for both general government and enterprise purposes?

GASB does not require that all costs be allocated. However, the preferred treatment is that all costs be allocated, including depreciation. If a proprietary fund is used to measure costs on a full accrual basis, then such costs are allocated.

Additional expenses allocated to the enterprise fund are often difficult to identify, such as expenses shared between a governmental and proprietary operation (for example, rental space or utilities). To allocate these costs, a reasonable method of estimation can be used to distribute the total costs among the object classes and between the fund types.