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Double Counting
The process whereby a single expense is counted in two different classes of expense classifications.

There are two main areas in which double counting can occur:
  • Capex-Opex Spillover

Included below are some examples of Capex-Opex spillover:
  • The painting for the fences is reflected in a reserve study as a capital expense but the work is done by the caretaker as part of his/her activities and funded from the annual operating budget.
  • The reserve study includes an allowance for replacement of 33% of the smoke alarms every 8 years but the fire protection contractor replaces 5% of these devices as part of the annual alarm certification process.
Double counting can occur when a capital items appears in the capital budget but is also being funded as an operating expense (capex-opex spillover).

Double counting occurs when a cost is recorded as both a capital cost and simultaneously as an operating cost.

This occurs insidiously without being realized by the owners.

Double counting may result in:
  • Overfunding - for future capital expenses due to an inflated capital load.
  • Understating - of the actual percent funded since the formula is based on an inflated quantum.

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