GASB 54 Fund Classifications
By: Janis Slater, CPA, Manager | email
It is important to review the new Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, that was issued March 30th, 2009. GASB 54 significantly changed the requirements for reporting fund balances for governmental funds. The new statement clarifies the definitions of individual governmental funds and may change the activities reported in a government’s special revenue fund.
Beginning in fiscal year ending June 30, 2011, governments are required to separately identify amounts that are non-spendable. All other amounts will be classified according to resource constraints. The new classifications are as follows:
Non-spendable Fund Balance – Amounts that are not in spendable form, such as inventory, prepaid amounts and long term receivables, and those that legally or contractually must be kept intact, such as the principal of endowments or revolving loan funds.
Restricted Fund Balance – Amounts that can be used only for specific purposes due to constitutional provisions, enabling legislation or externally imposed constraints, such as restrictions imposed by creditors, grantors or other governments.
Committed Fund Balance – Amounts that can only be used for specific purposes because of a formal action by the government’s highest decision making authority. These constraints are binding unless removed in the same manner in which they were originally committed.
Assigned Fund Balance – Amounts intended for specific purposes but not restricted or committed. The assigned fund balance can never be in excess of the total fund balance less the non-spendable, restricted and committed components of fund balance. Ultimately, this is the residual fund balance for all funds other than General Fund.
Unassigned Fund Balance – The residual classification for the General Fund, the only governmental fund that can report a positive unassigned fund balance. Other funds might have a negative unassigned fund balance due to overspending restricted, committed or assigned amounts. Not all components will always be present in each fund.
This overview of the requirements of GASB Statement 54 is to remind governments of the requirements which are now in effect. Governments will have to restate existing fund balances to conform to the new requirements. Governmental officials need to be educated about the new classifications and disclosures, and it may be necessary to alert third parties about any changes which could affect debt covenants or other requirements.
If more information is needed or if you have questions, feel free to call our Charles City office at 641-228-7096.
