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Basic Information

Note: EPA no longer updates this information, but it may be useful as a reference or resource.

Full Cost Accounting (FCA) is a systematic approach for identifying, summing, and reporting the actual costs of solid waste management. It takes into account past and future outlays, overhead (oversight and support services) costs, and operating costs.

FCA can be a new way of thinking about Municipal Solid Waste (MSW) management for some communities. For others, it can be simply an extension of current management practices. Understanding the benefits of FCA can help ease its implementation in your community.

Definition of FCA

Historically, local governments have tended to use cash flow accounting (also called general fund accounting) to track the flow of current financial resources (dollars). This accounting system records outlays when cash is actually paid for goods and services. It helps government agencies account for the expenditure of tax dollars and other public funds.

While FCA is consistent with generally accepted accounting principles, it serves different goals and audiences than traditional government accounting reports. FCA is not the same as cash flow or general fund accounting, as it focuses on the flow of economic resources (assets) and recognizes costs as resources are used or committed, regardless of when money is spent. Because solid waste management can entail significant expenditures both before and after the operating life of management facilities, focusing solely on the use of current financial resources misrepresents the costs of MSW management and can be misleading.

FCA focuses on three major types of costs that are relatively easy to determine. These are up-front costs, operating costs, and back-end costs. Other categories of costs that can be included in the scope of FCA, but require special consideration are remediation costs at inactive sites, contingent costs, environmental costs, and social costs.

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