There are two key components to the GFOA's recommended practice on applying full-cost accounting to municipal solid-waste management operations, which are described in the paragraphs that follow.
In current practice, solid-waste management operations are commonly accounted for in either or both types of funds.
Such a focus is incompatible with full-cost accounting, which, as its name implies, is primarily concerned with the cost of providing solid-waste management services.
The GFOA's recommended practice recognizes that FCA requires the gathering of cost information for solid-waste management operations on an accrual basis.
a government can use one or more proprietary funds (which use accrual accounting) to account for all or a portion of the government's solid-waste management operations, or
There are a number of specific activities associated with municipal solid-waste management.
In practice, many key decisions involving solid-waste management will focus on the cost of a given program path rather than on the cost of a specific activity.
Governments provide varying combinations of solid-waste management services (e.
1) The second step in the process of implementing FCA is to identify all of the direct costs associated with each of the solid-waste management activities identified in step one.
In the context of FCA, indirect costs can be defined as costs that benefit solid-waste management activities, but that would continue to exist for the benefit of other programs were the benefitting solid-waste management activities to cease.
Only a portion of total indirect costs should be considered to be costs of a government's solid-waste management program.
Revenues related to solid-waste programs that 1) are not generated through normal collection rates or tipping fees and that 2) would cease to exist for the benefit of other programs were the solid-waste management program to be eliminated are typically treated as an offset to cost.