GASB Statement 54 Fund Balance Reporting and Governmental Fund Types

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GASB Statement 54 Fund Balance Reporting and
Governmental Fund Types

• deene.dayton_at_state.sd.us
• 773-5932

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Intro

• Statement No. 54
• Released March 11, 2009
• Effective for periods beginning after June 15,
  2010

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Current F/B

• Fund balance is a term used for assets minus
  liabilities in a governmental fund

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Current F/B

• Reserved F/B
• Resources not available for spending
• Reserve for inventory
• Long-term loan receivable
• Legal restrictions on spending
• Restriction narrower than the purpose of the fund
  itself
• Bond covenants

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Current F/B

• Designated F/B
• Managements intended future use of resources
• Designated for future projects
• F/B applied to subsequent years budget

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Current F/B

• Unreserved, Undesignated F/B
• Whats left
• May even represent whats left in a Special
  Revenue Fund

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Current Proprietary Food Service

• Net Assets
• Invested in Capital
• Restricted
• Unrestricted

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New F/B - Listing

• Nonspendable
• Restricted
• Committed
• Assigned
• Unassigned

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New F/B - Nonspendable

• Not in spendable form, such as
• Inventory
• Long-term loans and notes receivable
• Prepaids
• Amounts legally or contractually required to be
  maintained intact
• The principal balance of a permanent fund

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New F/B - Restricted

• Similar definition as for net assets in Statement
  34 when constraints are placed on resources in
  the following manner
• External parties
• Debt covenants
• Contributors
• The constitution
• State law (CO, SPED, Pension)

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New F/B - Committed

• Amounts that can only be used for specific
  purposes pursuant to constraints imposed by
  formal action of the highest level of decision
  making authority (governing board)
• Constraint can be removed or changed only by the
  same body (governing board)
• Action to constrain resources should occur prior
  to the end of fiscal year, though the exact
  amount may be determined subsequently

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New F/B - Assigned

• Amounts that are constrained by the governments
  intent to be used for specific purposes
• Intent is expressed by
• The governing body
• A body or individual to which the governing body
  has delegated the authority to assign amounts to
  be used for specific purposes

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New F/B - Assigned

• Constraints imposed on the use of assigned
  amounts are more easily removed or modified than
  those imposed on amounts that are classified as
  committed.
• Some governments may not have both committed and
  assigned fund balances, as not all governments
  have multiple levels of decision-making authority.

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New F/B - Assigned

• By reporting particular amounts that are not
  restricted or committed in a special revenue,
  capital projects, debt service, or permanent
  fund, the government has assigned those amounts
  to the purposes of the respective funds.
• In other words, the non-general funds will only
  have an unassigned balance if it is negative.

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New F/B - Assigned

• An appropriation of existing f/b to eliminate a
  projected budgetary deficit in the subsequent
  years budget (f/b applied) satisfies the
  criteria to be classified as an assignment of
  fund balance.
• An assigned f/b is created if the proposed budget
  at the May meeting contains fund balance
  applied in the General Fund.

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New F/B - Assigned

• GASB believes that an appropriation of existing
  fund balance does not meet the criteria for a
  commitment because the government does not have
  to take action to remove the constraint---it
  expires at the end of the budgetary period.

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New F/B - Assigned

• Because outlying funds are generally already
  restricted f/b, it would not be appropriate to
  peel out some of the restricted to report as an
  assigned f/b for subsequent years budget.
• May record such assignments as a layer of
  restricted for internal tracking but may not
  display it as such on GAAP f/s.

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New F/B - Unassigned

• The residual classification for the General Fund.

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New F/B - ALL

• The amount that should be reported as
  nonspendable f/b should be determined before
  classifying amounts in the restricted, committed,
  and assigned f/b classifications.
• Place balances of a given fund from the top down,
  until the balances are gone. 1. nonspendable, 2.
  restricted, 3. committed, 4. assigned, and 5.
  unassigned

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New F/B - Negative

• Nonspendable, Restricted and Committed balances
  should always be reported at their full
  established amounts even if they cause a
  negative unassigned.

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New F/B - Negative

• An assigned f/b cannot cause a negative
  unassigned.
• A district can only assign what it has.

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New F/B - Negative

• A negative residual amount should not be reported
  for restricted, committed or assigned fund
  balances in any fund.

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Special Laws

• Stay vigilant of special laws that establish
  levels of authority
• Interest Earned
• Sale of Surplus Property
• Transfers out of CO SPED SDCL 13-16-26

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Closing Revenues

• Go back to each fund and each revenue account and
  ask yourself where that account should be closed
  at the end of the year.
• Keep in mind the Special Laws

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Spending Priority

• All governmental funds should have a spending
  priority policy established
• Does your district want to spend restricted or
  committed dollars first.and so on.

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Closing Expenditures

• Review the expenditure accounts for each fund and
  determine if the established closing process
  coincides with the districts spending priority.

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New F/B - Display

• The following components of f/b
• Two components of nonspendable
• Major restricted purposes
• Specific purposes of committed and assigned
• The preceding may either be reported separately
  in the f/ss or aggregated in the f/ss and
  disclosed in the notes

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New F/B - Disclosures

• The disclosures for committed f/b should identify
  the governments highest level of decision making
  authority AND the formal action that is required
  to be taken to establish a f/b commitment

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New F/B - Disclosures

• The disclosures for assigned f/b should identify
  the body or official authorized to assign amounts
  to a specific purpose AND the policy established
  by the governing body pursuant to which that
  authorization is given.

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New F/B - Disclosures

• If a governing body has established a minimum f/b
  policy, then the policy should be described in
  the notes to f/s

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Fund Types Special Revenue

• Special revenue funds are used to account for
  and report the proceeds of specific revenue
  sources that are restricted or committed to
  expenditure for specified purposes.
• The proceeds of specific revenue sources should
  be the foundation for a special revenue fund.

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Fund Types Special Revenue

• The restricted or committed proceeds of specific
  revenue sources should be expected to continue to
  comprise a substantial portion of the inflows
  reported in the fund.

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Fund Types Special Revenue

• Note disclosures should disclose the purpose of
  each major Special Revenue Fund as well as
  identifying which revenues are reported in each
  of these funds.

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Special Revenue Impact Aid

• Impact Aid is special revenue but it is not spent
  on a special purpose so it technically is not a
  special revenue fund.
• But state law (SDCL 13-16-31) references a
  separate Impact Aid fund.

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Special Revenue Impact Aid

• When a GAAP/Compliance conflict exists, we try to
  satisfy both
• Maintain a separate Impact Aid Fund throughout
  the yearblend it with the General Fund for year
  end financial reporting
• Note Transfers from the Impact Aid Fund to
  non-General Funds would be reported as a transfer
  out of the General Fund (permissible under SDCL
  13-16-26.2)

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Special Revenue Impact Aid

• All funds are required to be budgeted (SDCL
  13-11-2), such as General, Impact Aid, CO
• GASB requires budgetary RSI for General and major
  special revenue funds
• Impact Aid is not a GASB recognized major special
  revenue fund so it will not be reported as
  budgetary RSI
• General Fund budgetary RSI will include only the
  budgeted General fund and not any blended Impact
  Aid amounts (explain in notes to RSI)

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Fund Types Capital Projects

• To account for the expenditure on capital
  outlays, including the acquisition or
  construction of capital facilities and other
  capital assets. (broader definition)

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Fund Types Capital Projects

• Although the use of a capital projects fund is
  not required, its application will prevent
  distortions of trend data in an entitys
  operating funds.

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Fund Types Debt Service

• To account for financial resources that are
  restricted, committed or assigned to expenditure
  for principal and interest.
• All debt does not trigger/mandate the use of a
  debt service fund.however

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Fund Types Debt Service

• Debt service funds should be used to report
  resources if legally mandated.
• Debt service funds should be used to account
  for resources that are being accumulated for
  principal and interest maturing in future years.
• (term bond)

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Fund Types Permanent

• Should be used to account for resources that
  are restricted to the extent that only earnings,
  and not principal, may be used for purposes that
  support the reporting governments programs.
• Not to include private purpose trust money that
  is for individuals, private organizations, or
  other governments.