HomeMy Public PortalAboutGASB_54GASB 54 Fund Balance Reporting and Governmental Fund Type Definitions
Background
Effective For Fiscal Year
June 30, 2011
Objective of Today’s Discussion
To provide an update on GASB Statement No. 54, so that you have an understanding of
changes in financial reporting
Fund Balance – Current Standard
What is Fund Balance?
Difference between assets and liabilities
Fund Balance – Current Standard
How do we allocate Fund Balance?
Reserved
Unreserved
Designated
Undesignated
Fund Balance – Current Standard
Traditional focus = Fund resources
available for appropriation (budgeting)
Reserved Fund Balance = Not available
Unreserved Fund Balance = Available
Fund Balance – Current Standard
Reserved Fund Balance =
Resources not available for spending in the current year’s budget. Example: long-term loan receivable, supplies inventories, pre-paid items.
Unreserved Fund Balance =
Fund Balance – Current Standard
Designated Fund Balance – intended use of resources by management or governing body. Example: Green Space, Beach Renourishment.
Undesignated Fund Balance – may be spent in the current year budget.
Need for change
Widespread confusion about terminology
Categories often applied inconsistently
Challenges to focus on availability for appropriation
New Fund Balance Classifications
Components of fund balance:
Nonspendable
Restricted
Committed
Assigned
Unassigned
New Fund Balance Classifications
Nonspendable
Restricted Essentially what is now reserved fund balance
Committed
Assigned Essentially what is now designated
Unassigned Essentially what is unreserved fund balance
Nonspendable Fund Balance
Not in spendable form
Cannot ever be spent (e.g., supplies inventories and prepaid)
Cannot currently be spent (e.g., the long-term portion of loans receivables
Legally or contractually required to be maintained intact (e.g., principal of an endowment fund)
Restricted Fund Balance
Amounts constrained to being used for a specific purpose by:
External parties (i.e., creditors, grantors, contributors, or laws or regulations of other governments
Imposed by law through constitutional provisions or enabling legislation
Committed Fund Balance
Amounts whose use is constrained by limitation that the government imposes upon itself
Constraint on use imposed by the government’s highest level of decision making authority
Same type of action required to remove or change the specified use
Action to constrain resources should occur prior to end of fiscal year
Assigned Fund Balance
Amounts intended to be used for specific purposes
Intent is expressed by
The governing body itself, or
An official delegated by the governing body
Committed Vs. Assigned
Both constrained to being used for specific purposes by actions taken by the government itself
Assignment is not required to be made by the government’s highest level of decision making authority
Same action is not required to remove or modify an assignment
Unassigned Fund Balance
Available for any purpose
General fund should be the only fund that reports a positive unassigned fund balance
Deficit balance possible in any governmental fund
Savings/Stabilization amounts
Amounts set aside for “rainy-day” are considered a specific purpose (committed)
If constraints on amounts meet criteria to be reported as restricted or committed, then savings can be considered specific purpose.
Stabilization amounts should not be reported as assigned fund balance.
Note Disclosure
Description of authority and actions that
lead to committed and assigned fund
Balance for Committed Fund Balance:
The government’s highest level of decision making authority and the formal action that is required to be taken.
Note Disclosure
For Assigned Fund Balance:
The body or official authorized to assign amounts to a specific purpose.
The policy established by the governing body pursuant to which that authorization is given.
Note Disclosure
Government policy regarding order of spending
Restricted and unrestricted fund balance
Committed, assigned, and unassigned
Savings/Stabilization arrangements
Authority for establishing
Requirements for additions
Conditions under which amounts may be used
-----------------------------------
Governmental Fund Type Definitions
-----------------------------------
General Fund
Current Definition: The general fund is used to account for all financial resources except those required to be accounted for in another fund.
GASB 54 Definition: The general fund is used to account for and report all financial resources not accounted for and reported in another fund.
Special Revenue Fund
Current Definition:
Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditure for specified purposes.
Special Revenue Funds
Statement 54 Definition:
Special Revenue Funds are used to account for and report proceed of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service
or capital projects.
Special Revenue Funds
Proceeds of specific revenue source that are restricted or committed should be recognized as revenue in the special revenue fund and not in the fund initially receiving them.
If the government no longer expects that a substantial portion of the inflows will derive from restricted or committed revenue source, then the resources should be reported in the general
fund.
Capital Project Funds
Current Definition:
Capital Project Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities.
Capital Project Funds
Statement 54 Definition:
Capital Project Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition
or construction of capital
facilities and other capital assets.
Debt Service Funds
Current Definition:
Debt Service Funds are used to account for the accumulation of resources for, and the
payment of, general long-term debt and interest.
Debt Service Funds
Statement 54 Definition:
Debt Service Funds are used to account for
and report financial resources that are
restricted, committed, or assigned to
expenditure for principal and interest.
Debt Service Funds
Debt Service Funds should be used to report resources if legally mandated.
Financial resources that are being accumulated for principal and interest maturing in future years also should be reported in debt service funds.
What to Do?
Communicate the fund balance changes to the Executive Office, so the changes are reflected in the FY 2010-11 Budget book.
The End