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Expense Classification

The sorting of the different types of expenses associated with the assets into various categories that are necessary for efficient and effective operations and management of the building.

The two broadest, and most common, classes of expenses are identified as follows:

Classification is necessary to ensure that expenses are:

Confusion sometimes arises when certain capital expenses are misclassified and funded from the operating budget. There are three scenarios for a CapEx mix:
  • Capital expenditures from the reserve account.
  • Capital expenditures from the operating budget.
  • Capital expenditures transferred to other parties.
Misclassification can result in double counting and under-reporting.


See also:


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