Standard 12: Detailed Functional Breakdown of Expenses - Include in the financial statements a breakdown of expenses (e.g., salaries, travel, postage, etc.) that shows what portion of these expenses was allocated to program, fund raising, and administrative activities. If the charity has more than one major program category, the schedule should provide a breakdown for each category.
Financial statements do not inlcude a detailed statement of functional expenses.
The Norton Healthcare Foundation was provided an opportunity to respond to the compliance issue and responded as follows: The Statement of Functional Expenses is only required by generally accepted accounting principles (GAAP) for Not for Profit Organizations which are Voluntary Health and Welfare Organizations (such as the Red Cross or United Way). This statement is not required by GAAP for the Norton Healthcare Foundation. Adding this statement would add complexity to our accounting and reporting processes and increase external audit procedures, which would increase Foundation expenses. It is in the best interest of the organization and our donors to avoid unnecessary operating costs.