One Expense, Different Questions
Direct cost coding identifies an expense with the activity that caused it, using supporting evidence. A shared cost pool collects expenses benefiting more than one activity before an authorized allocation distributes them. Putting something in a pool does not create a second expense or settle who will fund it.
| Question | Direct Coding | Shared Pool |
|---|---|---|
| What does the evidence identify? | A particular activity's expense | A benefit shared across activities |
| What remains to establish? | Correct classification and authorization | An approved distribution basis and allocation |
| What does the label not establish? | Funder eligibility or payment permission | Permission to charge any particular award |
Two Fictional Invoices
These invented USD amounts exclude tax, fees and currency conversion. Invoice INV501 is 400 USD for printing. Its delivery note identifies Workshop W as its only beneficiary. That supports consideration as a direct Workshop W cost, subject to the finance owner's checks. Invoice INV502 is 120 USD for office internet serving several activities. The packet contains no evidence identifying one activity as its sole beneficiary.
The evidence supports different questions: is the printing correctly coded to Workshop W, and where should the shared internet cost wait until an authorized allocation is established? Calling the internet bill a direct Workshop W cost would supply evidence the packet lacks. This example does not select an allocation driver, calculate shares or decide award eligibility.
The Double-Coding Trap
The two invoices total 400 + 120 = 520 USD. Suppose someone records INV501 as 400 USD direct expense and also puts that same full 400 USD into a pool containing INV502. Reported expense becomes 400 + 520 = 920 USD, overstating the two invoices by 400 USD.
This is duplicate expense recognition in the example. It is different from splitting one invoice accurately across several ledger lines whose combined expense equals the invoice. A matching invoice number is a reason to inspect possible duplication, not proof of fraud or an instruction to delete records.
Classification Does Not Create Funding
The finance owner resolves evidence, coding and authorized allocation. A budget label cannot turn a shared benefit into a single-activity expense. Neither a direct code nor a completed allocation establishes that a donor will reimburse the cost. See shared-cost allocation for the separate distribution task.
Source Scope
NCVO's allocation guidance and full cost recovery guidance, reviewed December 1, 2022, distinguish costing from recovery. HMRC's July 2026 VAT controls address processing an invoice once, not requiring one ledger line. The Australian Commonwealth duplicate-control page, checked November 1, 2026, supports reviewing possible duplicates. CC8, November 2024, concerns England and Wales charity controls. None supplies this example's allocation or donor permission.